23. You are given the following one-period-ahead binomial outcomes for a stock, trading at...

23. You are given the following one-period-ahead binomial outcomes for a stock, trading at a current price of S (h is the length of one period measured in years):

The continuously compounded interest rate is r. The time interval over which the stock moves is h. Answer the following questions:

(a) What is a martingale?

(b) If the normalized price of the stock is a martingale, then what is the probability q?

(c) What is the variance of the continuously compounded return on the stock in this scenario?