a) Use the binomial pricing model to calculate the value of a 1 year call option on a stock given the following:

Current stock price: $700

In 1 year it can go up to $1000 or down to $550

Current risk free rate on 1 yr t-bills : 4.5%

Exercise price of the option: $800

b) Use put- Call parity to find the price of a 1 year put option on the same stock as in part a, with same exercise price of $800.