1. The probability density function pc(S,t;S,t) for a risk neutral random walk is given by pc(S,t;S,t)=S2(tt)1exp(22(tt)(log(S/S)(r212)(tt))2). In the binomial method, the value of the underlying is Sm at time step mt and the value of the underlying at time step (m+1)t is Sm+1. Assuming that the underlying asset follows a risk neutral continuous random walk evaluate Ec[(Sm+1)4Sm]=0(S)4pc(Sm,mt;S,(m+1)t)dS showing all steps. You may assume that s21e2s2(xn)2dx=1 for all s>0