A stock price is currently $40. Over each of the next two six-month periods, it will either increase by 17% or decrease by 11%. The risk-free interest rate is 4% per annum with continuous compounding. 1) To use the 2-step binomial tree model to calculate a option price on the stock, calculate p (the risk-neutral probability) for each step (a six-month period). 2) What is the value of a one-year European call option with a strike price of $40? Use no-arbitrage arguments. 3) What is the value of a one-year American put option with a strike price of $42? Use no-arbitrage arguments and the two-step binomial model..