1. Consider a stock of ABC company. You estimate the expected return to be 12% per year (EAR) and the volatility to be 60% per year. ABC stock has a current price of $100 and has declared dividends of $1 per share to be paid at the end of each 3-month period. Construct a 2-period binomial model with quarterly periods if the probability of an up-value is estimated to be 9/13 = 69.23% in each node.