Question: Problem 3 Binomial Pricing ModeL Suppose that a a stock is currently selling for So 2 $150 and next year will either rise to S

Problem 3 Binomial Pricing ModeL Suppose that a a stock is currently selling for So 2 $150 and next year will either rise to S\" = $220 or fall to 3,; = $120. \"- Sd=120 The one year interest rate is 5%[year (EAR). The cost of capital of the stock is 10%. (a) (5 points) Compute the risk-neutral probability of an up movement to have 81 = $220. \f(c) (5 points) Find a portfolio of the call and the stock that. is riskless. \f

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