Rush$-$and$-$Cash's stock is currently traded at $$190$ per share. The stock price will either go up or go

down by $10\%$ in each of the next two years. The annual interest rate is $2\%.$ Assume the stock pays no

dividends the next two years. Bank XYZ issues a two$-$year European call option on the stock with the

strike price $$210.$

Suppose the price goes up at Year $1.$ How many shares of the stock and cash do you need to replicate

the payoff of the call option? $($in Year $1)$

Cash, $x$

$

Use minus sign if you borrow cash for the portfolio

Shares of stocks, $$

Use minus sign if you short stock for the portfolio

Suppose the price goes down at Year $1.$ What is the price of the option?

Price, $C_{1d}$

$

What is the price of the option at Year $0?$

Price, $C_0$