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A stock currently sells for $120, and will sell for either $90 or $145 one year from now. The risk free rate is 5%.

a. find out the hedge ratio for an at the money put option

b. Derive the price of the option using the binomial pricing model

c. What should be the price on an at the money call option?

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M941601

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