5. (16 points) The stock of Brita Ltd. is trading at $40 per share and the company does not pay dividend. In each of the following three years, the stock price will either go up or go down by 10% with equal probability. The risk-free continuously compounding annual interest rate is 5%. Consider a non-standard option which expires in three years and at time t 1 the holder of the option can choose whether the option is an American call or an American put, both with the strike price K = $40. In either case, the option expires at t = 3. Determine the price of this non-standard option. Show your work. 5. (16 points) The stock of Brita Ltd. is trading at $40 per share and the company does not pay dividend. In each of the following three years, the stock price will either go up or go down by 10% with equal probability. The risk-free continuously compounding annual interest rate is 5%. Consider a non-standard option which expires in three years and at time t 1 the holder of the option can choose whether the option is an American call or an American put, both with the strike price K = $40. In either case, the option expires at t = 3. Determine the price of this non-standard option. Show your work