help!!

1. Assume an economy where - One period is one year. - The one year short term interest rate from time n to time n+1 is tnn. - The rate evolves via a stochastic process {rn}n=0n=2, where: r0P^[rn+12rn]=0.02=21=P^[rn+1=21rn]. - Consider now a sero-coupon bond that matures in 2-years with common face and redemption valiue F=100. - Consider American Call Options on this bond that expire in 2 years with strike K=97. - Denote Bn and CnA as the bond and call option values at time n, respectively. Cialculite - the initial bond price B0,(40pts) and - The initial American Call Option price CA (60 pts)