problem 2,3 and "compute the value of the call option using risk neutral valuation."

18.1. Why is a multiperiod binomial model a better approximation to the actual stock price process than the single period binomial model? The next seven questions are based on the following data for a two-period binomial model A stock's price S is $100. After three months, it either goes up and gets multiplied by the up factor U = 1.163287, or it goes down and gets multiplied by the down factor D = 0.861785. - Options mature after T = 0.5 years and have a strike price K = $110. A dollar invested in the money market account grows to 1+R= $1.012578 after three months. The stock price tree is: Stock Today Stock 3 months Stock 6 months 135.3238 116.3287 100.00 100.2503 86.1785 74.2673 TO 18.2. Compute the call value in the above tree using synthetic construction. 18.3. Demonstrate how you can make arbitrage profits when a trader quotes a call price of $2