1. What is the delta of a one-year call option on Ragwort stock with an exercise price of $20? (Round your answer to 4 decimal places.)
2. Given the delta computed in part (a), how much would be borrowed if the replicating-portfolio method was used to value the call option? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
3. In a risk-neutral world, what is the probability that Ragwort stock will rise in price? (Round your answer to 2 decimal places.)
4. Using the risk-neutral method, what is the value of the call option? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
5. If someone told you that in reality there is a 60% chance that Ragwort's stock price will rise to $40, would you change your view about the value of the option?