Question 2. Value of a stock is currently at $40. Volatility of that stock is 30% per year and risk-free interest rate with continuous compounding is at 5% per year. Suppose you are planning to value a 3-month European call option with strike price at $41 using a two-step binomial model. Answer the following using this information. (Binomial Tree Approach to Option Valuation" in the slides has the relevant material for solving this. Also, there is an Excel file with an almost identical example.) a. What are the values of u, d and q? (These values have to be calculated using formulas provided in the slides. To find the value of e-ovat, use the Excel function exp with values of o and At )(3) b. Draw stock tree using the information provided. Indicate value of stock at expiration as well as at the intermediate nodes. (2) What is the set of values at expiration (at 3 months) for the option? (2) d. What is the set of values at the intermediate nodes (at 1.5 months)? (2) What is the value of the option at present? (2) f. Draw tree diagrams for the option. Indicate value at each node. (2) c. e