1. A non-dividend paying stock price is currently $50. Its 1-year expected volatility is 14.3% and the risk-free interest rate is 10% per annum (compounded continuously). a) Use a 1-step binomial tree to find the value of a two-month European call option with a strike price of $49? b) Using the BSM model what is the value of a 2-month European call option on the stock with a strike price of $49? Use the cumulative distribution table, provided in the appendix, or the "=NORM.S.DIST" function in Excel to solve N(d) and (d). See end of appendix for examples of how to use the table. 1. A non-dividend paying stock price is currently $50. Its 1-year expected volatility is 14.3% and the risk-free interest rate is 10% per annum (compounded continuously). a) Use a 1-step binomial tree to find the value of a two-month European call option with a strike price of $49? b) Using the BSM model what is the value of a 2-month European call option on the stock with a strike price of $49? Use the cumulative distribution table, provided in the appendix, or the "=NORM.S.DIST" function in Excel to solve N(d) and (d). See end of appendix for examples of how to use the table