I am not sure if my answers are right but I think they are please help.

4. Option pricing model - Binomial approach Learn Corp. (Ticker: LC), an education technology company, is considered to be one of the least risky companies in the education sector. Investors trade call options for Learn Corp., whose stock is currently trading at $42.00. Suppose you are interested in buying a call option with a strike price of $58.80 that expires in 6 months. (Assume that you get the option for free!) Based on speculations and probability analysis, you compute and collect the following information for your price analysis of the option: For LC's options, time until expiration (t) is taken as 0.50 year (6 months/12 months). LC's stock could go up by a factor of 2.00 (u). LC's stock could decline by a factor of 0.85 (d). Therefore, If the option At this time, LC's stock price is out-of-the-money, and if you exercised the option, your payoff would be $16.80 is out-of-the-money, you should not exercise the option. Calculate the ending stock price of Learn Corp. for both possible outcomes and the payoff in both situations. Price Increases Price Decreases $84.00 Stock price P(d) $35.70 Stock price P(u) Payoff C $25.20 Payoff Cd $0.00 and a certain value based on the payoff it generates. Based on your understanding of a hedge portfolio and assuming 365 day-based compounding, complete the following steps to find the value of the call option. (Hint: Please round all answers to four decimal places.) Step 1: The total number of shares of LC's stock in the portfolio is 0.7250 Step 2: The payoff from the portfolio if the stock is down is $35.7000 Step 3: If the annual risk-free rate 3%, the current value of the portfolio if the stock is down will be $ Step 4: The current value of the option if the stock is down is $ with a friend. She says she will use the information you gave her to replicate the option payoffs. After you find the value of your option, you discuss This is called a replicating portfolio. Based on your understanding of replicating portfolios, is the following statement true or false? The cost of the replicating portfolio will be equal to the value of the call option or else arbitrage will drive the prices to be equal. False True Grade It Now Save & Continue