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Suppose you have just purchased one share of Twitter stock for $50. The stock is not expected to pay a dividend during the time you

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Suppose you have just purchased one share of Twitter stock for $50. The stock is not expected to pay a dividend during the time you plan to hold it. You have forecasted that in one year the stock price will either rise to $65 or fall to $40. Suppose further that you can either buy or sell a call option on Twitter stock with a strike price of $52.50. Assume that this is a European style contract that expires exactly in one year and that the risk-free interest rate is 8%. (a) Calculate the hedge ratio (H). (b) If you wish to create a riskless portfolio, how many call options should you write given that you own 1 share of stock? (c) Based on your answer from Part (b), fill in the following table showing that you have created a riskless portfolio. (d) Calculate the price of the call option

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