Letrsquos suppose that the current value of a stock is 34, Ask an Expert

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Let’s suppose that the current value of a stock is $34. Further let’s assume there exists a call option on this stock with an exercise price of $40. Suppose you think the stock is either going to go up by 12% or down by 11% over the next period. Use the binomial option pricing approach to solve for the hedge ratio. Show all you work and draw the trees.

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Financial Management, Finance

Category:- Financial Management
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