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Suppose that the current price of BA stock is $200. The annual standard deviation is 10%....

Suppose that the current price of BA stock is $200. The annual standard deviation is 10%. the continuously compounded risk-free rate is 4% per year.

Assume BA pays no dividends

a. Compute a European put option price with the respective intrinsic values of a 2 year with a strike price of $198 using a four=step binomial model (Δt = 0.5).

b.. Compute an American put option price with the respective intrinsic values of a 2 year with a strike price of $198 using a four-step binomial model (Δt=0.5).

c. Compare two option prices and provide your findings from the results.

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