Question 4. Consider a two-period binomial model in which a non-dividend-paying stock currently trades at a price of $40. The stock price can go up 14 percent or down 11 percent each period. The risk-free rate is 3 percent per period. Calculate the price of a call option expiring in two periods with an exercise price of $40. (Solution: $3.81) Calculate the price of aput option expiring in twoperods with an exercise price of$40. (Solution: S1.52)