1. Using the information in this module, please compute the two-step binomial model price of a European Call Option (BY HAND) with the following characteristics:

S = 50 K = 50 Sigma = 30% r = 1.00% T = 6 months D = 0

Please draw out the "tree" used in your calculation, scan or take a picture of this document, and upload.

2. For the same option, create a spreadsheet that calculates the binomial model option price. Please verify that the price is similar to the one you obtained in Part 1 of this assignment.