a. Consider a call option. If, in a two-state model, a stock can take a price of $176 or $132, what would be the hedge ratio for each of the following exercise prices: $176, $170, $160, $132? (Leave no cells blank - be certain to enter "0" wherever required. Round your answers to 2 decimal places.)

X		Hedge Ratio
$	176
$	170
$	160
$	132

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 0