Consider an American put option with strike and maturity T for an underlying asset. Answer the following questions.
(a) Explain how to find the American put option price using a M-step binomial tree model. You may use the following notations to create the tree model: upward and downward movements u and d, respectively, upward and downward probabilities by p and 1 − p, respectively, risk-free rate r, and initial price S0.