Question: Suppose S = $100, K = $95, r = 8% (continuously compounded), t = 1, 0 = 30%, and 8 = 5%. Use an eight-period

Suppose S = $100, K = $95, r = 8% (continuously

Suppose S = $100, K = $95, r = 8% (continuously compounded), t = 1, 0 = 30%, and 8 = 5%. Use an eight-period lognormal binomial tree to answer the following questions. (a) Construct the stock tree. (b) Compute the prices of an European call option. (c) Compute the prices of an American put option. Suppose S = $100, K = $95, r = 8% (continuously compounded), t = 1, 0 = 30%, and 8 = 5%. Use an eight-period lognormal binomial tree to answer the following questions. (a) Construct the stock tree. (b) Compute the prices of an European call option. (c) Compute the prices of an American put option

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