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Consider 4-period binomial model. Current stock price(S0) is $100, possible prices for the next period are $105 and $97. Assume periodic risk-free rate is 1%.

a. Graph the binomial tree for the future stock prices.

b. Calculate the prices for call and put options, which are at-the-money at period 0 and mature at period 4, for each possible future and current price of the stock.

This is a case of One Step Binomial Model Where, The strike price is 100 ,the possible prices for the next period may be 105 and 97. Given the Risk fr