10. You use a one--period binomial model to price a European call option on a non-dividend paying stock. You are given: a. The period is 6 months b. The replicating portfolio of the option consists of 0.4 purchased shares of the stock and an amount of 30 borrowed at the risk-free interest rate C. the current price of the stock is 80 d. the appropriate discount rate for the call option in the real world is 12% e. the continuously compounded risk free interest rate is 5% Calculate the continuously compounded annual expected return on the stock. 10. You use a one--period binomial model to price a European call option on a non-dividend paying stock. You are given: a. The period is 6 months b. The replicating portfolio of the option consists of 0.4 purchased shares of the stock and an amount of 30 borrowed at the risk-free interest rate C. the current price of the stock is 80 d. the appropriate discount rate for the call option in the real world is 12% e. the continuously compounded risk free interest rate is 5% Calculate the continuously compounded annual expected return on the stock