A share price is currently 463, and over each of the next two 6 month periods it is expected to go up by 15% or down by 12%. The risk free interest rate is 2% per annum. There is a contract V trading on the market which has the payoff 100 if S 400 Vr= f(S) = 500-S if 400 500 0 This contract can be exercised early to receive the payoff f(S) at any time before expiry if the contract is an American style contract. The European style contract can only be exercised at expiry. (i) What is the value of the European style contract with one year left until expiry? (ii) What is the value of the American style contract with one year left until expiry? (Hint: use a two-step binomial tree in both (i) and (ii).)