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A stock price is currently $52. Its volatility is 35% p.a. . The risk-free interest rate is 8% p.a. with continuous compounding. What is the

A stock price is currently $52. Its volatility is 35% p.a. . The risk-free interest rate is 8% p.a. with continuous compounding.

What is the value of a 2-year European call option with a strike price of $55, using a 2-step binomial tree?

Without doing any calculations, explain what would happen to the value of the option if the stock volatility decreases.

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