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3. (11 pts) The tree below shows possible stock prices -- starting from 100, prices can go to either 110 or 95, and from 110

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3. (11 pts) The tree below shows possible stock prices -- starting from 100, prices can go to either 110 or 95, and from 110 can go to either 121 or 104.5 and from 95 can go to either 104.5 or 90.25. What would the hedge ratio be in finding Cd for a call option with strike price of 102? Show work/explain. Cuu Cu C Cud = Cdu Cd Cdd 100 110 95 121 104.5 90.25

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