I need the answer as soon as possible

0 1. Consider that S, represents the market price of a stock at time t=0 and S, represents the expected market price at time t=1. Further assume that the stock price at t=1 will either increase by 11 percent or decrease by d percent. That is, S, = (1+)s, or S, = (1-d)Sg. Let r be the risk-free interest rate and C be the current price of a call option on the underlying stock with a strike price of X. Given the information, consider a hedged portfolio to be comprised of buying a certain amount (H)of the asset and selling a call option on the same underlying assci. Note that this is the case of a covered call strategy. Required: (a) What is the cost of the portfolio? (6) What will be the payoff of the hedged porfolio i the stock price at time t=l increases by percent or decreases by d percent? y Regardless of the state that occurs at time !=1, what is the optimal hedging ratio at which payoffs from the heviged portfolio would be the same? Derive the price of the call option. D Giver that u = 0.15, d=0.15, and S. - $25.0, estimate the optimal hedging ratio, le price of (4x10=40 Marks) the call option, and the amount of borrowing. York Stock Exchange on April