Answer 3 attached questions. I want answers with detailed steps.

Question 1 Buffelhead's stock price is $220 and could halve or double in each six-month period (equivalent to a standard deviation of 98 percent). A one-year call option on Buffelhead has an exercise price of $165. The interest rate is 21 percent a year. (a) What is the value of the Buffelhead call? (b) Now calculate the option delta for the second six months if (i) the stock price rises to $440 and (ii) the stock price falls to $110. (c) How does the call option delta vary with the level of the stock price? Explain intuitively why. (d) Suppose that in month 6 the Buffelhead stock price is $110. How at that point could you replicate an investment in the stock by a combination of call options and riskfree lending? Show that your strategy does indeed produce the same returns as those from an investment in the stock. Question 2 Wesley Corp. stock is trading for $25/share. Wesley has 20 million shares outstanding and a market debtequity ratio of 0.5. Wesley's debt is zero-coupon debt with a 5-year maturity and a yield to maturity of 10%. a. Describe Wesley's equity as a call option. What is the maturity of the call option? What is the market value of the asset underlying this call option? What is the strike price of this call option? b. Describe Wesley's debt using a call option. c. Describe Wesley's debt using a put option. Question 3 It is September 13, 2012, and you own IBM stock. You would like to insure that the value of your holdings will not fall significantly. Using the data in Problem 3, and expressing your answer in terms of a percentage of the current value of your portfolio: a. What will it cost to insure that the value of your holdings will not fall below $200 per share between now and the third Friday in September? b. What will it cost to insure that the value of your holdings will not fall below $200 per share between now and the third Friday in October? c. What will it cost to insure that the value of your holdings will not fall below $205 per share between now and the third Friday in October