Reconsider the determination of the hedge ratio in the two-state model where we showed that one-third share of stock would hedge one option. The possible end-of-year stock prices, uSo - $90 (up state) and dSo $54 (down state). a. What would be the call option hedge ratio for each of the following exercise prices: $90, $71, $63, $54, given the possible end-of- year stock prices, u90 = $90 (up state) and dSO = $54 (down state)? (Round your answers to 3 decimal places.) Exercise Hedge Ratio Price 90 71 63 54 b. What do you conclude about the hedge ratio as the option becomes progressively more in the money? O Increases to a maximum of 1.0 0 Decreases to a minimum of 0 Reconsider the determination of the hedge ratio in the two-state model where we showed that one-third share of stock would hedge one option. The possible end-of-year stock prices, uSo - $90 (up state) and dSo $54 (down state). a. What would be the call option hedge ratio for each of the following exercise prices: $90, $71, $63, $54, given the possible end-of- year stock prices, u90 = $90 (up state) and dSO = $54 (down state)? (Round your answers to 3 decimal places.) Exercise Hedge Ratio Price 90 71 63 54 b. What do you conclude about the hedge ratio as the option becomes progressively more in the money? O Increases to a maximum of 1.0 0 Decreases to a minimum of 0