A) Suggest a one-period binomial model with h = 1, where S = 100, r = 0:04, sigma = 0:30, and delta = 0:02. Consider American call. What is the lowest strike price at which early exercise will occur
B) Follow the above problem. Suppose the true expected return on the stock is 10%. What is the price of the 80-strike call? What is the expected return on this call option?