1. Price of a non-dividend-paying stock is currently $50. It is known that at the end of three months it will be either $55 or $45. The risk-free rate of interest with continuous compounding is 8% per annum. Calculate the value of a three-month European put option on the non-dividend-paying stock with a strike price of $50.

2. Price of a non-dividend-paying stock is currently $60. Over each of the next two four-month periods it is expected to go up by 5% or down by 5%. The risk-free interest rate is 6% per annum with continuous compounding. Using a two-step binomial tree, calculate the value of an eight-month European call option on the non-dividend-paying stock with a strike price of $61.