1. Calculate the price of a call option using the binomial pricing model and assuming that the short rate follows the FabozziKalotay andWilliams model. The current rate is 6%, mu is .1 and vol is .23. The strike price is 93.75 and the option matures in a year. Your answer should be to the nearest penny.
2. A put option has a strike price of 93 and it matures in a year. Use the binomial option pricing model to find its price. The current one year interest rate is 8% and the 2 year spot rate is 8.3%. Use this information to get the forward rate for next year. Once you have that add 50bpto get the high rate on the tree and subtract 50 bp to get the low rate. Your answer should be rounded to the nearest penny.
3. Use the binomial option pricing model to price a call option with a maturity of one year and a strike price of 96.The current one year rate is 4% and it could either go up to 5% or down to 3%.Each rate has a 50-50 chance of occurring. Your answer should be to the nearest penny.

Please show and explain to me the steps so that I can learn. I am new to this.