1. Price a European Call & Put and an American Put on a stock that is currently selling at $25 and has a volatility of 25%. The options all have a life of 7 months and a strike price of $26. The 7-month risk free rate is 3% per annum with continuous compounding. a. Use a 12-step binomial tree to price all 3 options b. Use a 13-step binomial tree to price all 3 options c. Use the Black-Scholes-Merton formula to price the European options

2. Use the information in question 1, but now the stock will pay a dividend of $1 in 3 months from today. Price European Call & Put and American Call & Put using a 7-step binomial tree.

Looking for answer and explanation in Excel please