1.) A stock selling for $25 today will, in 1 year, be worth either $35 or $20. If the interest rate is 8%, what is the value today of a one-year call option on the stock with exercise price $30? Use the simultaneous equation approach to price the option.

2.) Compute the state prices qu and qd, and use these prices to calculate the value today of a one year put option on the stock with exercise price $30.