Q1:

The current price of Natasha Corporation stock is $ 6.00. In each of the next two?years, this stock price can either go up by $ 2.50 or go down by $ 2.00. The stock pays no dividends. The?one-year risk-free interest rate is 3.0 % and will remain constant. Using the Binomial?Model, calculate the price of a?two-year put option on Natasha stock with a strike price of $ 7.00.

The price of the?two-year put is ?$__.

Q2:

What is the highest possible value for the delta of a call?option? What is the lowest possible?value? (Hint: See Figure)