Question 3 (1) Consider a 8-month European put option with strike price K = $35. The current stock price So = $30, the volatility is o = 30% and the risk-free rate is 4% continuously compounded. Compute u, d and the option price by using a 2-step binomial model. (2) Consider the American version of the put option in (1), compute the American put price and list the nodes in which you early exercise the option. (3) Apply the control variate technique in the Binomial Model to im- prove the accuracy of the American price obtained in (2) if the price of the European Put Option with the Black-Scholes Formula is fes = 5.5735. Question 3 (1) Consider a 8-month European put option with strike price K = $35. The current stock price So = $30, the volatility is o = 30% and the risk-free rate is 4% continuously compounded. Compute u, d and the option price by using a 2-step binomial model. (2) Consider the American version of the put option in (1), compute the American put price and list the nodes in which you early exercise the option. (3) Apply the control variate technique in the Binomial Model to im- prove the accuracy of the American price obtained in (2) if the price of the European Put Option with the Black-Scholes Formula is fes = 5.5735