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Use the information below for Q5-6. Suppose that a 2-period binomial model of stock price correctly prices the stock of Apple. Apple's current stock price
Use the information below for Q5-6. Suppose that a 2-period binomial model of stock price correctly prices the stock of Apple. Apple's current stock price is 130. Assume that u=1.03 and d=0.97. u250 u So udso dSo d-S Q5. Complete the table below for the value of the call option written on Apple with a strike price of $125. Assume risk free rate is 0% and each call option gives you the right to buy 1 share of AAPL. Round your answer to the nearest cent. Co Cud Odd CO Cu Cd Cuu Cdd Cud Q6. Suppose you are a market maker who sold one call option to a client and wants to use dynamic portfolio insurance strategy to hedge the exposure. Complete the table below for trades on the Apple stock that the market maker needs to make at each node of the tree. Round your answer for quantities to 2 decimal places. Au Ad Au Ad buy/sell quantity
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