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QUESTION 3 A stock price is currently $40. It is known that at the end of 1 year it will be either $48or $32. The risk-free interest rate is 5% per annum with continuous compounding. What is the probability of a down movement "1-p" with a strike price of $527 Hint: draw a tree 0.3718 0.9876 0.6282 0.3567 QUESTION 4 A stock price is currently $40. It is known that at the end of 1 year it will be either $48or $32. The risk-free interest rate is 5% per annum with continuous compounding What is the value of a portfolio at a time of 1 year with a strike price of $447 (use A-0.25) Hint: draw a tree 8 7.610 12 4