1. Consider the three-period binomial model with a non-dividend paying stock S, where So = 4, u = 2, d = 0.5, r = 0.25. Your boss has asked you to price a European put option which expires at time N = 3 and has strike K = 1. The payoff of the put option at N is V(Put,Euro) N (1) := max {K Sn,0}. Do you use a node, or path-based, approach? Please explain. (10 pts) -(Put,Euro) 2 -(Put,USA) Now, compute the American put price Vo under the same structure. (40 pts) -(Digital, USA) Finally, compute the American digital price V. Digi under the same structure, where the payoff is G(S) = 1{$ 1. Consider the three-period binomial model with a non-dividend paying stock S, where So = 4, u = 2, d = 0.5, r = 0.25. Your boss has asked you to price a European put option which expires at time N = 3 and has strike K = 1. The payoff of the put option at N is V(Put,Euro) N (1) := max {K Sn,0}. Do you use a node, or path-based, approach? Please explain. (10 pts) -(Put,Euro) 2 -(Put,USA) Now, compute the American put price Vo under the same structure. (40 pts) -(Digital, USA) Finally, compute the American digital price V. Digi under the same structure, where the payoff is G(S) = 1{$