1. (10pts) Consider a stock currently priced at $150. In the next period, the stock can either increase by 33 percent or decrease by 15 percent. Assume a European put option with an exercise price of $150 and the risk-free rate of 4.5 percent. Suppose the put option is currently trading at $11. Assume that you can long and short US Treasury securities (equivalently, you can lend and borrow money at the risk-free interest rate). Also, the stock does not pay any dividend over the life of the option. Use a one period binomial model to calculate the price of the put option (X=150). You may solve this problem by completing the cells in gray. Or you could solve in the most comfortable way. risk-free rate Size of an up-move, u Size of a down-move, d Current stock price, So risk-neutral probability of up-move, Tu risk-neutral probability of down-move, d =1-u Exercise Price 4,50% 150 150 Su So Pu Sa Pa