The current stock price of Alcoco is $$45,$ and the stock does not pay dividends. The instantaneous risk$-$free rate of return is $3\%.$ The instantaneous standard deviation of Alcoco's stock is $30\%.$ You want to purchase a put option on this stock with an exercise price of $$50$ and an expiration date $30$ days from now. According to the BlackScholes OPM, you should hold shares of stock per $100$ put options to hedge your risk. Assume $365$ days in a year

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Question $27$

$2$ pts

The stock price of Bravo Corporation is currently $$105.$ The stock price a year from now will be either $$160$ or $$55$ with equal probabilities. The interest rate at which investors invest in riskless assets is $6\%.$ Using the binomial OPM, the value of a put option with an exercise price of $$140$ and an expiration date $1$ year from now should be worth $$ today. Can you give me a detailed explanation on how to do this? Excel is perfect, but written is fine as well! Thank you