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QUESTION 20 The following information will be used for questions 16-20 for a two-period binomial pricing model: Current stock price: 45 Put option strike price:

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QUESTION 20 The following information will be used for questions 16-20 for a two-period binomial pricing model: Current stock price: 45 Put option strike price: 50 Risk free rate of return: 3% Upward parameter: 1.05 Downward parameter: 0.95 Calulcate the hedge ratios between times 1 & 2 (T1 & T2): O hu: 1 hd: 1 O hu: -1 hd: -1 O hu: 0 Calulcate the hedge ratios between times 1 & 2 (T1 & T2): O hu: 1 hd: 1 Ohu: -1 hd: -1 O hu: 0 hd: -1 O hu: -1 hd: 0

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