Answer Happy

We determined in class the value of a call with a strike of $175
on APPL stock when,
S0= $100,T = 3,r = 5%,u = 2 or 200% (stock price doubles as we
go up the tree), and
d =1/u= ½= 0.5 or 50% (stock price halves as we godown the
tree.)
We calculated the premium in 4 related ways. There is a list of
the methods at the end of thisdocument. They all produced the same
premium value of approximately $32.132.
1.Use any method to determine the premium for a put on APPL
stockusing the sameparameters and a strike of $175.Show your work
for full credit. (1 point)
2.Consider a structure that pays offprecisely double the payoff
from the put. Value this option.I suggest you think about this
question before calculatingbecause there is a simple way toanswer
the question using the Law of One Price.Show your work for full
credit. (1 point)
3.Consider a structure that pays off the square of the put
payoff. Value thisoption. Remember,thefourmethods work for any
payoffthat you write down.Show your work for full credit.
(1point)