To show that lognormal price dynamics is the continuum limit of a family of binomial trees, we considered the following multiperiod multiplicative tree: the stock price at the initial node is S(0); if at a given node the stock price is Snow, then at the next time it can be either uSnow or dSnow, where u = eMAt+oAt and d= euat-oat; at each time, the stock goes up or down with probability 1/2 for each choice. Fixing N, consider the stock price after N time steps, s(NAT). (a) Suppose that over the course of the N time steps the stock goes upj times and down N - j times. Express InS(NAt) in terms j. (b) What is the mean of InS(NAT)? (c) What is the variance of InS(NAt)? To show that lognormal price dynamics is the continuum limit of a family of binomial trees, we considered the following multiperiod multiplicative tree: the stock price at the initial node is S(0); if at a given node the stock price is Snow, then at the next time it can be either uSnow or dSnow, where u = eMAt+oAt and d= euat-oat; at each time, the stock goes up or down with probability 1/2 for each choice. Fixing N, consider the stock price after N time steps, s(NAT). (a) Suppose that over the course of the N time steps the stock goes upj times and down N - j times. Express InS(NAt) in terms j. (b) What is the mean of InS(NAT)? (c) What is the variance of InS(NAt)