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135$, and 125$ are wrong can you please help me! a. If, in a two-state model, a stock can take a price of 140 or
135$, and 125$ are wrong can you please help me!
a. If, in a two-state model, a stock can take a price of 140 or 105, what would be the hedge ratio for each of the following prices: $140, $135, $125, $105? (Leave no cells blank - be certain to enter "O" wherever required. Round your answers to 2 decimal places.) Hedge Ratio $140 $135 $125 $105 0.08 0.35 b. What do you conclude about the hedge ratio as the option becomes progressively more in the money? Increases to a maximum of 1.0 Decreases to a minimum of 0Step by Step Solution
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