• The price of a firm's stock is currently $100 per share. The stock price follows a binomial process where it either goes up 30% or down 20% each year. The stock pays no dividends, and the risk- free interest rate is 10% each year.
• a)  What is the value today of an American put option on the stock with a strike price of $100 and 2 years to expiration?
• b) Without doing any further calculations, would the value today of a European put option on the stock with a strike price of $100 and two years to expiration be higher than, lower than, or equal to the value of the American put option you computed in part a? Why?