5) Price a European Call & Put and an American Put on a stock that is currently selling at $25 and has a volatility of 25%. The options all have a life of 7 months and a strike price of $26. The 7-month risk free rate is 3% per annum with continuous compounding.

a. Use a 12-step binomial tree to price all 3 options

b. Use a 13-step binomial tree to price all 3 options

c. Use the Black-Scholes-Merton formula to price the European options

6) Use the information in question 5, but now the stock will pay a dividend of $1 in 3 months from today. Price European Call & Put and American Call & Put using a 7-step binomial tree. please show and explain all work