Suppose that the price of a stock varies over one period following a binomial process. In addition, you are given the following data:

Price of the stock (S) = 100

Probability that the price of the stock increases (p) = 0.40

Risk-free interest rate (rf) = 0.05

Variation rate in the price of the stock if it goes up (U) = 0.15

Variation rate in the price of the stock if it goes down (D) = -0.10

Strike of the call on the stock: 105

a) Determine the possible evolution of the stock price over one period.

b) Determine the possible evolution of price of the call over one period.

c) Determine the composition of the replication portfolio.

d) Calculate the risk-neutral probabilities.

e) Calculate the price (premium) of the call today.