Problem 1.1. Consider following two step binomial tree for stock price movement for a year. Each step is 6-month SO 60 55 50 35 Consider a one year American call option to buy stock at $50. Assume annual effective interest rate is 5%. At each node, calculate replicating portfolio (that mean calculate A and B) Calculate call option value at time zero If option style is European instead of American, what would be the price of the 2? If option is an American put option, instead of call option what would be the of the option f option is an European put option what would be the price of the option? Problem 1.1. Consider following two step binomial tree for stock price movement for a year. Each step is 6-month SO 60 55 50 35 Consider a one year American call option to buy stock at $50. Assume annual effective interest rate is 5%. At each node, calculate replicating portfolio (that mean calculate A and B) Calculate call option value at time zero If option style is European instead of American, what would be the price of the 2? If option is an American put option, instead of call option what would be the of the option f option is an European put option what would be the price of the option