60 58 55 53 52 Figure 3.1 Tree of price movements in Example 3.2 Exercise 3.1 Sketch a tree representing the scenarios and price movements in Exam- ple 3.1. Exercise 3.2 Suppose that the stock price on any given day can either be 5% higher or 4% lower than on the previous day. Sketch a tree representing possible stock price movements over the next three days, given that the price today is $20. How many different scenarios can be distinguished? 60 58 55 53 52 Figure 3.1 Tree of price movements in Example 3.2 Exercise 3.1 Sketch a tree representing the scenarios and price movements in Exam- ple 3.1. Exercise 3.2 Suppose that the stock price on any given day can either be 5% higher or 4% lower than on the previous day. Sketch a tree representing possible stock price movements over the next three days, given that the price today is $20. How many different scenarios can be distinguished