1. Stock XYZ is currently at $100. Over the next period, it will either go up to $125 or down to $80. If the rick free interest rate per period is 7%, what can you conclude regarding the actual ( not risk neutral) probability of stock price going up?

a. it is below 40%

b. it is above 60&

c. it is below 60%

d. it is between 40% and 60%

2. A commodity producer speculatively sells OTM put options to receive some cash. Next year, it expects to produce and sell 100,000 units of the commodity and decided to sell puts on 5,000 units. The puts have a delta of -0.05 per unit. If the commodity price instantaneously decrease by $1 per unit, the producer's put option position will :

a. Gain $5,000 because the producer hedged 5,000 units

b. Lose $250 because the puts have a delta of -0.05

c. Gain $250 because the puts are sold

d. None of the above

PLEASE NEED HELP ANSWER all the questions. Thanks.