1. A European put written on shares has strike price $8 and expires in five time steps. Using CRR notation, the underlying share prices are calculated using S = $7, u 1.15 and 1 1/u. The return on a bank investment over each time step is R 1.05. (a) Find the premium of an American put with the same underlying asset, strike price and expiry as the European put. (e) At which nodes might the holder of the American put consider exercising the option? (1) Using the Black Scholes model, calculate the premium of the European put and the otherwise identical European call when the time to expiry is one month 1. A European put written on shares has strike price $8 and expires in five time steps. Using CRR notation, the underlying share prices are calculated using S = $7, u 1.15 and 1 1/u. The return on a bank investment over each time step is R 1.05. (a) Find the premium of an American put with the same underlying asset, strike price and expiry as the European put. (e) At which nodes might the holder of the American put consider exercising the option? (1) Using the Black Scholes model, calculate the premium of the European put and the otherwise identical European call when the time to expiry is one month