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***This is from Investment and Financial Mathematics (IFM) course for Actuaries. Please give handwritten solution...

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Finance

***This is from Investment and Financial Mathematics (IFM) course for Actuaries. Please give handwritten solution with all steps shown. I will give "thumbs-up" for clear and correct solution. Thanks in advance!***

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Future prices of a stock are modelled with a 2-period binomial tree, each period being 6 months. Consider an American put option expiring in 1 year on a 1-year futures contract on the stock. You are given: (i) The tree is constructed based on forward prices. (ii) The underlying stock price is 700 and the strike price is 720. (iii) The continuously compounded risk free rate is 3%. (iv) The stock pays no dividends. (v) o = 0.1. Determine the price of the option

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