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A Vanilla American put and European put options with the same underlying, time to expiry and strike price $26.00, the underlying asset S (0) is
A Vanilla American put and European put options with the same underlying, time to expiry and strike price $26.00, the underlying asset S (0) is $26 and the return over each period R=1.06. CRR notation d=0.8 and u=1.25
Construct a three-step binomial pricing tree for both the Vanilla American and European put options and calculate the premiums. Please Show all working.
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