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Consider a stock which is currently selling for $50. Construct a two-step binomial tree, 1-month and...

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Finance

Consider a stock which is currently selling for $50. Construct atwo-step binomial tree, 1-month and 2-months respectively for eachof the two steps. The stock market volatility is 30%, the rate ofinterest is assumed to be 5% and the exercise price is $52. (i)Calculate the price of an American Put. (ii) Provide a graphicalillustration to demonstrate how the put price and the put payoffchange with respect to changes in the stock price. (iii) Put all inan excel attachment or copy and paste entire excel sheet

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