Question 1: ABL shares are currently trading at a price of $18, while HHT shares are trading at a price of $48.75. The risk-free rate is 1.29% per year.

b) If HHT shares have a 77% chance of increasing by 10% and a 23% chance of decreasing by 13% by the date of the option expiration, what will be the expected return on HHT shares and the expected return on a protective put position? For simplicity you may assume the put has a price of $1 and has the same strike-price as listed above.