Multiple Choice
Use the two-state put-option value in this problem. SO = $100; X = $120; the two possibilities for ST are $150 and $80. The range of P across the two states is _____, and the hedge ratio is _______.
A) $0 and $40; −4/7
B) $0 and $50; +4/7
C) $0 and $40; +4/7
D) $0 and $50; −4/7
E) $20 and $40; +1/2
Correct Answer:
Verified
Correct Answer:
Verified
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