Consider a two-period binomial model with a stock that trades at $100. Each period the stock can go up 25% or down 20%. The interest rate is 10%. Your portfolio consists of one share of the stock. You want to trade so that the value of your modified portfolio will not drop below $90 at the end of the second period. Describe the steps to be taken in order to achieve this goal. Only the stock and the bank account are available for trading.
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