1. The current price of the BNM stock is $60.00. The stock pays no dividends. The current continuously compounded risk free rate is 4% per year. At the end of one year, the stock will either be valued at $72.00 or $50.00. Recall that a straddle is made up of one long call option and one long put option. Using the one step binomial tree model, calculate the price of a one-year straddle with a strike price of $62.50