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The answer is E, but I would like to see the math behind it. a. 7. Consider a binomial world in which the current stock
The answer is E, but I would like to see the math behind it.
a. 7. Consider a binomial world in which the current stock price of 80 can either go up by 10 percent or down by 8 percent. The risk-free rate is 4 percent. Assume a one-period world. What is the hedge ratio for a 70 call? 0.429 b. 0.714 0.571 d. 0.823 *e. 1.000Step by Step Solution
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