Consider the discrete binomial option-pricing model. The price of the underlying asset is 50 dollars and the call option has an exercise price of 48 dollars. The risk free rate is 5%, and the price of the underlying asset could go up by 10% or go down by 10%. Consider the continuous return process.You are pricing an European call option that will expire in one year.

If you consider your portfolio to consist of N units of the underlying asset, what is the sum of money that you will borrow to finance this portfolio? ____________

What is the optimal number of units of the underlying asset that you should hold in your portfolio? _____________

What are the values for the following variables:

U: ________________

D: ________________

R: ________________

c_U: ________________

c_D: ________________