The current price of Firm X stock is $100. In each of the next two periods this stock price can either go up by $10 or go down by $10. The stock pays no dividends. The period interest rate is 4% and will remain constant. Consider a two-year call option on Firm X with a strike price of $116. (a) Draw the binomial tree associated with this option. (b) Suppose you decide to keep the call option until expiration (t=2). For each possible price of the stock at t=2 (each terminal node of the binomial tree), what is the payoff of the call option at expiration (at t=2)? (c) Suppose you decide to sell the call option at the end of the first period. For each possible price of the stock at t=1, what is the price of the call option (at t=1)? (d) What is the price of the call option at t=0? (e) Discuss why the binomial assumption (i.e., that the stock price can only take two possible values on each node of the tree) is crucial to find a replicating portfolio