Q1) For all of this question: r = 5%, 8 = 1%, u = 1.07, d = 0.93 a) So = $56, K = $50, T = 3 months. Find the price of the call option with strike K expiring at time I by finding the replicating portfolio A and B. b) So = $45.70, K = $50, T = 3 months. Find the price of the call option with strike K expiring at time I by finding the replicating portfolio A and c) So = $50, T = 3 months, Cup = the value of the call you got from part a), Cdn = the value of the call from part b). Price the call option at t = 0 using the replicating portfolio A and B. d) Draw the 2 step binomial tree for the stock prices using So = $50, T = 6 months (so h = 3 months). See how you can combine parts a), b), and c) to price the call option with strike K expiring at time 6 months. Q1) For all of this question: r = 5%, 8 = 1%, u = 1.07, d = 0.93 a) So = $56, K = $50, T = 3 months. Find the price of the call option with strike K expiring at time I by finding the replicating portfolio A and B. b) So = $45.70, K = $50, T = 3 months. Find the price of the call option with strike K expiring at time I by finding the replicating portfolio A and c) So = $50, T = 3 months, Cup = the value of the call you got from part a), Cdn = the value of the call from part b). Price the call option at t = 0 using the replicating portfolio A and B. d) Draw the 2 step binomial tree for the stock prices using So = $50, T = 6 months (so h = 3 months). See how you can combine parts a), b), and c) to price the call option with strike K expiring at time 6 months