PLEASE HELP OUT WITH QUESTION A,B AND C THANKSS

Question 5 (10 marks) 28 23 Su Sd 28 18 17 Consider a binomial model for a call option with the share and strike (K) prices given above. Assume that SO=20 and exp(-rT)=0.9. (a) Write an excel spreadsheet to compute the price of a call option for the three scenarios given above. (b) Report alpha, beta and verify that your replication portfolio produces the same outcome as the call option. (c) Write a clear and concise one sentence explanation of the qualitative price difference between each of the second two scenarios and the first. You should report the formulas you are using in your report, and your answers as well as a neat and legible screen grab of your excel spreadsheet. Note the excel commands for the option outcomes are provide below. The provision of a clear and efficient report that allows the marker to understand your work and see the inputs of your calculations will been taken into account. 195 Sample answer 196 197 198 199 200 0.05 FORMULATEXT(CELL) 0.5 0.975309912 -exp(-B197*B198) exp(-IT) Su 201 Sd 20 202 203 (Su-K)^+ (Sd-K)^+ 25 15 =IF(B$200-B$202>0,B$200-B$202,0) 0 =IF(B$201-B$202>0,B$201-B$202,0) 204 Question 5 (10 marks) 28 23 Su Sd 28 18 17 Consider a binomial model for a call option with the share and strike (K) prices given above. Assume that SO=20 and exp(-rT)=0.9. (a) Write an excel spreadsheet to compute the price of a call option for the three scenarios given above. (b) Report alpha, beta and verify that your replication portfolio produces the same outcome as the call option. (c) Write a clear and concise one sentence explanation of the qualitative price difference between each of the second two scenarios and the first. You should report the formulas you are using in your report, and your answers as well as a neat and legible screen grab of your excel spreadsheet. Note the excel commands for the option outcomes are provide below. The provision of a clear and efficient report that allows the marker to understand your work and see the inputs of your calculations will been taken into account. 195 Sample answer 196 197 198 199 200 0.05 FORMULATEXT(CELL) 0.5 0.975309912 -exp(-B197*B198) exp(-IT) Su 201 Sd 20 202 203 (Su-K)^+ (Sd-K)^+ 25 15 =IF(B$200-B$202>0,B$200-B$202,0) 0 =IF(B$201-B$202>0,B$201-B$202,0) 204