Consider a stock that is currently priced at Sl$00.$ Over the next two periods each period couldrepresent, for example, three months$),$ the stock price can either go up by $20\%($u $=1\mathrm{.}2$ or go downby $20\%($d $=0\mathrm{.}8)$ in each period. The risk$-$free interest rate is $5\%$ per annum. You are tasked withvaluing a European put option on this stock with a strike price of SlOu and a maturity that coincides with the second Deriod$\mathrm{.}1.$ Construct the Binomial TreeDetermine the stock prices at each node for the two periodsCalculate the pavott ot the put option at each terminal node.. Backward InductionUse the risk$-$neutral probabilities to value the option at each node, starting from the terminal nodes and working backward to the initial node.Calculate the risk$-$neutral probability p$,$ ris the risk$-$free rate, and A$/$ is the time per period$\mathrm{.}3.$ Option ValuationDerive the value of the European put option at the initial node using the discounted expected payoff under the risk$-$neutral measure.Give a Financial Interpretation.