A stock sells for $$135.$ At the end of the current period, you expect the stock to be either $$150$ or $$120.$

A call option with $x=130$ exists on the stock.

The relevant interest rate is $12\%.$

Find and interpret the hedge ratio.

Using the hedge ratio, set up a perfectly hedged portfolio. Also, show that this portfolio is perfectly

hedged.

Find the price of the call using the hedge$-$ratio method.

Find the price of the call using a replicating$-$portfolio method.