18. We repeat the previous question with higher volatility and interest rates and with lower dividends. Consider a two-period binomial tree with the following parameters: S = 100, u = 1.20, d = 0.80, and R = 1.10. Suppose also that a dividend of $2 is expected after one period.
(a) Compute the risk-neutral probability in this world.
(b) Find the tree of prices of an American call option with a strike of 100 expiring in two periods.
(c) What is the early-exercise premium?
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