PROBLEM 10. [10 points] Consider a three period binomial model with parameters U = 1.10, d = 0.95. Suppose the per-period interest rate is r = 3%. Suppose the initial stock price is $60. (a) Calculate the value of an American put option on the stock with the maturity of three periods, and a strike price of $62. (b) Compute the early exercise premium. PROBLEM 10. [10 points] Consider a three period binomial model with parameters U = 1.10, d = 0.95. Suppose the per-period interest rate is r = 3%. Suppose the initial stock price is $60. (a) Calculate the value of an American put option on the stock with the maturity of three periods, and a strike price of $62. (b) Compute the early exercise premium