Let = $40, K = $40, = 8% (continuously compounded), = 30%, = 0, = 0.5 year, and = 2. a. Construct the binomial tree for the stock. What are and ? b. Show that the call price is $4.110. c....

Let
= $40, K = $40,

= 8% (continuously compounded),

= 30%,

= 0,

= 0.5 year, and

= 2.

a. Construct the binomial tree for the stock. What are

and
?

b. Show that the call price is $4.110.

c. Compute the prices of American and European puts.