A stocks price is $27.00 and its volatility is 32% per year. An American put on the stock has nine months until expiration, an exercise price of $25.00, and the risk-free interest rate is 2.5% per year. According to a two-period binomial option pricing model, what is the options value?

Question 20 options:

1)

$1.83

2)

$1.62

3)

$2.32

4)

$2.17

5)

$1.98