5. a. Verify that in a one-time-period binomial economy with a risk-free return rate equal to r and a stock currently selling for So that the synthetic (risk-neutral) probability for upward price movement in this economy is characterized by (1+r d)/(u d) where u and d are multiplicative upward and downward stock price movements, respectively, meaning that the stock price will equal either Si = US, or Si = dSo. b. Harper Company stock currently sells for $14 per share and is expected to be worth either $10, $16, or $25 in 1 year. The current risk-free rate is 0.125. A 1-year call with an exercise price of $15 currently sells for $3. i. What would be the value of a 1-year call with an exercise price of $9? ii. What are the synthetic probabilities in this economy? 5. a. Verify that in a one-time-period binomial economy with a risk-free return rate equal to r and a stock currently selling for So that the synthetic (risk-neutral) probability for upward price movement in this economy is characterized by (1+r d)/(u d) where u and d are multiplicative upward and downward stock price movements, respectively, meaning that the stock price will equal either Si = US, or Si = dSo. b. Harper Company stock currently sells for $14 per share and is expected to be worth either $10, $16, or $25 in 1 year. The current risk-free rate is 0.125. A 1-year call with an exercise price of $15 currently sells for $3. i. What would be the value of a 1-year call with an exercise price of $9? ii. What are the synthetic probabilities in this economy