Potenie cespiration dates and Ar = I have two bonds, Biar, t) and B2(r, t) with different expiration dates and Ar = uAt + 0.02AX where AX ~ N(0, At). My portfolio has II = Bi aB2. (a) (10) Find the Ito's Lemma for this choice (b) (5) What a value should be used for hedging? (c) (10) Suppose I want to hedge by possibly investing II in a bank with inter- est rate (different from the rate of the bonds) 0.02. Find the Black-Scholes Equation. (Leave it in an ugly form.) Potenie cespiration dates and Ar = I have two bonds, Biar, t) and B2(r, t) with different expiration dates and Ar = uAt + 0.02AX where AX ~ N(0, At). My portfolio has II = Bi aB2. (a) (10) Find the Ito's Lemma for this choice (b) (5) What a value should be used for hedging? (c) (10) Suppose I want to hedge by possibly investing II in a bank with inter- est rate (different from the rate of the bonds) 0.02. Find the Black-Scholes Equation. (Leave it in an ugly form.)