4. (10 points) Consider a l-step binomial model, where there are two possible time evolution H, T and a stock with current price So = 100 and time-1 price S (H) = 120, S, (T) = 90. Assume one-time interest rate r = 3% during 10,1). Consider a European call option on this stock with strike price K = 110. (1) Consider the following portfolio I [A, shares of the stock] + [Short one call option with strike 110 and maturity 1). (2) Compute the value of Ao such that the above portfolio is perfectly hedged. From this, find the current value c = 10(0.1) of the European call option. (ii) Consider the following portfolio A shares of the stock] + [x cash). (3) Compute the value of Ao and x such that the above portfolio replicates one long call option. From this, find the current value c = C10(0,1) of the European call option