Consider an American contract V that pays off in a two-step binomial model with parameters (a) Find.
(a) Find the price V$(n) for n = 0, 1, 2. Determine the
optimal stopping strategy τ ∗.
(b) Find the hedging portfolio.
(c) What is the price and an optimal stopping strategy
for an American contract that pays off min
(5$τ , Sτ)?