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Q 3 . Calculate: Call Premium ( 2 Period Bi - nominal ) . Put Premium ( 2 Period Bi - nominal ) . Hedge

Q3. 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
=1.2
Down Factor
=0.8
Rate of interest =5%

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