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PLEASE SOLVE THIS WITHOUT BLACK-SCHOLES MODEL OR WILL DOWNVOTE 5. (a) Suppose that a stock currently trades for $100, that the risk-free interest rate is

image text in transcribedPLEASE SOLVE THIS WITHOUT BLACK-SCHOLES MODEL OR WILL DOWNVOTE

5. (a) Suppose that a stock currently trades for $100, that the risk-free interest rate is 2% per annum, and European call options with expiry in 1 year have strike prices of $115 and $130, and currently trade for $2.15 and $0.36, respectively. Use a 1-period binomial tree to estimate the present value of a digital call option (on the same stock with the same expiry) with a strike price of $110

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