Consider a one-period binomial model where S = $50, r = 4%, and ? = 30% (this does NOT mean that prices move up or down by 30% per year). There are no dividends. Compute European call and put prices for E = $50 and T = 1 year.

The European call price is _____________________.

The European put price is _____________________.

Re-compute the option values with E = $50 and T = 2 years assuming that there are two one-year periods in the binomial tree. How would the call and put prices change if the option were an American option?

The European call price is ______________________

The American call price is ______________________

The European put price is ______________________

The American put price is ______________________