17. A six-month call option with an exercise price of $40 is selling for $5. The current price of the stock is $41.25. The hedge ratio of the option is .65.

a. What percentage change in the option's price is likely to accompany a 1%

change in the stock's price?

b. If the beta of the stock is 1.l0, what is the beta of the option? (Hint: Recall what the beta of a stock implies about the relationship between the stock's price and that of the rnarket.)