1. Consider a 2-year EUROPEAN PUT with a strike price of $65 on a stock whose current stock price is $60. Suppose that there are two time steps, and in each time step the stock price either moves up by 20% or moves down by 20%. Also suppose that risk-free rate is 5% per annum with continuous compounding . What is the value of the European put option?

   		5.19
   		6.25
   		3.75
   		4.89