Jones Corporation stock currently trades for $100.The company's cash flows are extremely volatile, which leads you to believe that the stock will increase by 160% or decrease by 37.5% every six months for the next year. One year European put options on the stock have a strike price of $80.The current risk free rate is 4%, compounded quarterly.

Find the risk-adjusted probability that the stock increases each period.Round intermediate steps and your final answer to four decimals and enter your answer in decimal format (.XXXX).

How many puts are needed per 100 shares of stock owned in order to create a risk-free portfolio?

1.22

-5.57

5.57

-1.22

Find the value of the European put using the binomial option pricing model.

14.09

10.20

13.92

12.27

Use the binomial option pricing model to find the value of an American put option on Jones stock with the same characteristics as the European put mentioned above.

37.03

20

37.78

31.65

27.72