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Use the binomial model to calculate the value of BOTH an American put option and a European put option on a stock that pays a $5 dividend each quarter. The option expires in six months and the second dividend is paid just after the options expire (you can ignore the second dividend). The exercise price is $55. The current stock price is $60 and the annual standard deviation of the stock price is 45%. This implies that the stock price may rise by 25% each quarter or the stock price may fall by 20% each quarter (up multiplier is 1.25 and down multiplier is .8) the risk-free rate is a quarterly 2% (i.e the annual risk-free rate is 8.24%)

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