We will derive a two-state call option value in this problem. Data: S₀ = $180; X = $190; 1 + r = 1.10. The two possibilities for S_T are $210 and $110. The portfolio consists of 1 share of stock and 5 calls short. a. The range of S is $100 while that of C is $20 across the two states. What is the hedge ratio of the call? (Round your answer to 2 decimal places.)

b. Calculate the value of a call option on the stock with an exercise price of $190. (Do not use continuous compounding to calculate the present value of X in this example, because the interest rate is quoted as an effective per-period rate.) (Do not round intermediate calculations. Round your answer to 2 decimal places.)