Q3 Use the binomial tree you computed in 2a). Compute the replicating port- folio for a call option for a single step at each node of the tree. Show that the replicating portfolios give the same values for the option as the binomial tree at each node. i.e. compute the replicating portfolio A and B if S = $50 and t = 0, (u and d are as you computed in 2a)), Cup and Can are the values at the nodes of tree at time t 0.125 T/2. Then do the same for S S * u at time t = 0.125, and the same again for S = S* d at time t = 0.125. See the spreadsheet to see a sample of what you need to compute. = = Q3 Use the binomial tree you computed in 2a). Compute the replicating port- folio for a call option for a single step at each node of the tree. Show that the replicating portfolios give the same values for the option as the binomial tree at each node. i.e. compute the replicating portfolio A and B if S = $50 and t = 0, (u and d are as you computed in 2a)), Cup and Can are the values at the nodes of tree at time t 0.125 T/2. Then do the same for S S * u at time t = 0.125, and the same again for S = S* d at time t = 0.125. See the spreadsheet to see a sample of what you need to compute. = =