Forward Pricing and Binomial Option Pricing Models:

The price of a share of Zoom stock is currently $250. It is known that at the end of 1 year, the Zoom share price will be either $312.50 or $200. The riskless interest rate is 2% per year.

(A) Calculate the price of a 1-year European put option on Zoom stock with an exercise price of $250.

(B) Next, add another 1-year timestep; i.e., it is known that at the end of 2 years, the Zoom share price will be $390.63, $250, or $160. Calculate the price of a 2-year European call option on Zoom stock with an exercise price of $250. Also, calculate the price of a 2-year European put option on Zoom stock with an exercise price of $250.