Question: Two - period binomial tree. A stock has a price of $ 2 0 , and a standard deviation of 2 6 % . The

Two-period binomial tree.
A stock has a price of $20, and a standard deviation of 26%. The continuous risk-free rate is 10%. There are European and American call and put options with a strike price of $19 and time to expiration of 2 years written on the stock. Using a two-step recombining CRR binomial tree, answer the following:
a. What is the risk-neutral probability of the stock price going up in a single step?
Round your answer to two decimals.
b. What is the theoretical value of the European call?
$ Round your answer to the nearest cent.
c. What is the theoretical value of the European put?
$ Round your answer to the nearest cent.
d. What is the theoretical value of the American put??
$
Round your answer to the nearest cent.
Two-period binomial tree. A stock has a price of $20, and

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