Q$3.$ Calculate:

$$ Call Premium $(2$ Period Bi$-$nominal$).$

$$ Put Premium $(2$ Period Bi$-$nominal$).$

$$ Hedge ratio,

$$ Calculate profit in one period of a portfolio which has Delta number of share and one put

option. $($Hint: assume buy or sell share in friction$)$

$$ S $($stock price$)=1000$

$$ X $($strike price$)=1010$ spot pricea

$$ Up factor

$=1\mathrm{.}2$

$$ Down Factor

$=0\mathrm{.}8$

$$ Rate of interest $=5\%$