illustrate how to value a call option on Matson Company with a one-period binomial option pricing model. It is a non-dividend-paying stock, and the inputs are as follows: 

• The current stock price is 40, and the call option exercise price is 40. 

• In one period, the stock price will either rise to 45 or decline to 35. 

• The risk-free rate of return is 5% per period. 

Based on the model, 

1. estimate the hedge ratio 

2. estimate the risk-neutral probability of an up move 

3. estimate the price of the call 

4. describe related arbitrage positions to use if the call option is overpriced relative to the model.