the current price of a continuous-dividend-paying stock is $65 per share. its dividend yield is 0.02. we model the stock price at the end of two years using a binomial tree. it is assumed that the stock price can either go up, or go down by 30%. the continuously compounded, risk-free interest rate equals 0.05. consider a two-year, $70-strike european call option on the above stock. what is the risk-free component of the replicating portfolio for this option?
