: Consider a European call option on a stock, with a $54 strike and 1-year to expiration. The stock has a continuous dividend yield of 5%, and its current price is $59. Suppose the volatility of the stock is 14%. The continuously compounded risk-free interest rate is 5%. Use a two-period Cox-Ross-Rubinstein tree to calculate the following: (a) The payoff at time 2: Up movement. (b) The payoff at time 2: Middle movement. (c) The payoff at time 2: Down movement. (d) The payoff at time 1: Up movement. (e) The payoff at time 1: Down movement. (1) The option cost at time 0. (A) 19.92 (B) 17.92 (C) 20.92 (D) 18.92 (E) 21.92 B(a). Select Part (a) choices (A) 2.00 (B) 3.00 (C) 5.00 (D) 6.00 (E) 4.00 (b) Select Part (6) choices (A) 2.00 (B) 1.00 (C) 3.00 (D) 4.00 (E) 0.00 8(e): Select 1 Part (c) choices (A) 12.86 (B) 11.86 (C) 10.86 (D) 9.86 (E) 13.86 8(d) Select t Part (d) choices (A) 2.32 (B) 0.32 (C)-1.68 (D) -0.68 (E) 1.32 Bre) Select T Part (o) choices (A) 5.22 (B) 6.22 (C) 4.22 (D) 3.22 (E) 2.22 80: Select t Part (1) choices Save : Consider a European call option on a stock, with a $54 strike and 1-year to expiration. The stock has a continuous dividend yield of 5%, and its current price is $59. Suppose the volatility of the stock is 14%. The continuously compounded risk-free interest rate is 5%. Use a two-period Cox-Ross-Rubinstein tree to calculate the following: (a) The payoff at time 2: Up movement. (b) The payoff at time 2: Middle movement. (c) The payoff at time 2: Down movement. (d) The payoff at time 1: Up movement. (e) The payoff at time 1: Down movement. (1) The option cost at time 0. (A) 19.92 (B) 17.92 (C) 20.92 (D) 18.92 (E) 21.92 B(a). Select Part (a) choices (A) 2.00 (B) 3.00 (C) 5.00 (D) 6.00 (E) 4.00 (b) Select Part (6) choices (A) 2.00 (B) 1.00 (C) 3.00 (D) 4.00 (E) 0.00 8(e): Select 1 Part (c) choices (A) 12.86 (B) 11.86 (C) 10.86 (D) 9.86 (E) 13.86 8(d) Select t Part (d) choices (A) 2.32 (B) 0.32 (C)-1.68 (D) -0.68 (E) 1.32 Bre) Select T Part (o) choices (A) 5.22 (B) 6.22 (C) 4.22 (D) 3.22 (E) 2.22 80: Select t Part (1) choices Save