a.Consider a call option. If, in a two-state model, a stock can take a price of $184 or $138, what would be the hedge ratio for each of the following exercise prices: $184, $180, $170, $138?(Leave no cells blank - be certain to enter "0" wherever required. Round your answers to 2 decimal places.)

X Hedge Ratio

$184

$180

$170

$138

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 or Decreases to a minimum of 0