Binomial Option Pricing Model 5. Dow Chemical (DOW) is trading at $56 per share. At the end of six months, DOWs stock price can take on only one of two values: it can either go up to 75 or it can decline to 38. The risk free interest rate (continuously compounded) is 1% per year. a. Value a six-month (i.e., one period) European call options with strike price of $55 per share using the binomial model. Use the risk-neutral valuation approach. b. Next, assume that you are interested in replicating the call option payoff with A shares of stock and B invested in risk-free bonds. What would your replicating portfolio look like? What would its A be