At time t, the exchange rate for the JaAt time t, the exchange rate for the Japanese yen and the U.S. dollar is 96.75/$. The exchange rate volatility is 30%, the Japanese riskless interest rate for continuous compounding is 0.2%, and the U.S. dollar interest rate for continuous compounding is 1.5%. (a) Consider a call option on the U.S. dollar with a strike price equal to 100/$. The contract size is $50,000 and the option expires in 6 months. The option is European exercise and the terms of the contract are European. Using a one-step binomial tree, what is the total price of the call option at time t? Use replication to answer this question. (b) Answer the question in part (a) again, this time using risk neutral valuation.panese yen and the U.S. dollar is 96.75/$. The exchange rate volatility is 30%, the Japanese riskless interest rate for continuous compounding is 0.2%, and the U.S. dollar interest rate for continuous compounding is 1.5%. (a) Consider a call option on the U.S. dollar with a strike price equal to 100/$. The contract size is $50,000 and the option expires in 6 months. The option is European exercise and the terms of the contract are European. Using a one-step binomial tree, what is the total price of the call option at time t? Use replication to answer this question. (b) Answer the question in part (a) again, this time using risk neutral valuation.