Call options-the stock does not pay dividends

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1. Call Options Consider a 1-period binomial model with R=1.02, S0=100, u=1/d=1.05. Compute the value of a European call option on the stock with strike K=102. The stock does not pay dividends. Please submit your answer rounded to two decimal places. So for example, if your answer is 3.4567 then you should submit an answer of 3.46.

2. Call Options II When you construct the replicating portfolio for the option in the previous question how many dollars do you need to invest in the cash account? Please submit your answer rounded to three decimal places. So for example, if your answer is −43.4567 then you should submit an answer of −43.457.

Reference no: EM131321526

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