A European call option is to be priced using the binomial model assuming the following data Strike price shs 50; Maturity 1 year, two intervals; Continuously compounded annual risk free interest at 3%; Volatility of underlying stock 30%; Current stock price shs 50 (a) Calculate the accumulation factor for each six month period? (b) Show that the up and down factors for the share price over a six month period are u= 1.227073 and d= 0.802814 respectively. (c) Calculate the asset prices, representing this information on a binomial tree. (d) By constructing a replicating portfolio of shares and cash and working to 5 decimal places, calculate the initial premium for the option. (e) Discuss briefly the trading strategy for the writer of this option if the underlying share always increases in value. A European call option is to be priced using the binomial model assuming the following data Strike price shs 50; Maturity 1 year, two intervals; Continuously compounded annual risk free interest at 3%; Volatility of underlying stock 30%; Current stock price shs 50 (a) Calculate the accumulation factor for each six month period? (b) Show that the up and down factors for the share price over a six month period are u= 1.227073 and d= 0.802814 respectively. (c) Calculate the asset prices, representing this information on a binomial tree. (d) By constructing a replicating portfolio of shares and cash and working to 5 decimal places, calculate the initial premium for the option. (e) Discuss briefly the trading strategy for the writer of this option if the underlying share always increases in value