A stock price is currently $81. It is known that at the end of 6 monthsit will be either $81u or $81/u, where u = 1.0247. The riskfree rate is1% per annum with continuous compounding. Calculate the value of a6-month European put option on the stock with an exercise price of$80. Verify that no-arbitrage arguments and risk-neutral valuationarguments give the same answer.

Please see question#2 in attached document.