Q3. Use a binomial approach to calculate the value of both an American call option and a European call option on a stock that pays a $5 dividend at the end of the first quarter. The option expires in six months, and the exercise price is $20. The current stock price is $30 and the annual standard deviation of stock price is 45% (this implies that the stock price may rise by 25% each quarter or the stock price may fall by 20% each quarter). The risk free rate is a quarterly 3% (i.e. the annual risk free rate is 12.55%)