Consider a one year (two-period) European put option where the initial price is 0 = 100 and there is assumed to be a possible 20% up or down price movement in each year. The risk free interest rate is 5% and the strike price is 104.

(a) Draw a Binomial tree to illustrate the set of possible price movements. [2 marks]

(b) Evaluate the payoffs to the option at the second stage terminal nodes. [2 marks]

(c) Use the risk neutral formula to evaluate the price of the option at the first stage nodes and thereafter at the initial node. [5 marks]

if you could help me with these 3 parts to the question that would be great! Thank you! I have answered the question but just wanted to compare to see if I have answered it correctly.