Question 2, Part (A) 2.0 / 2.0() Shares of firm XYZ are currently traded at $100.00. Over the next two years, each year, the price can move up by 31.19% or down by 9.70%, with equal probability. The risk-free interest rate is fixed at 5.73% per year (simple annual rate) for all maturities. XYZ pays no dividends. = = Consider an exotic option on XYZ. This option matures at t 2 and can be exercised at most once: at time t = 1, or at time t 2. If held until t = 2, the option pays S2 - K if exercised, and nothing otherwise. Assume K is $100.00. At time t = 1, the holder of the option can choose one of the following three actions: 1. Do nothing and wait until the next period 2. Exercise the option at time t = 1 and collect S K - 3. Cancel the option contract and collect $20.00 at time t Use the above to answer the following parts (A) - (C). = 1 Compute the risk-neutral probability of the stock price going up in the first period. 0.3814