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You want to buy a stock that is currently selling for ( $ 4 0 ) , You forecast that in one

You want to buy a stock that is currently selling for \(\$ 40\), You forecast that in one year, the stock's price will be either \(\$ 102\) or \(\$ 4\), with equal probabilities. There is a one-year call option on the stock available with an exercise price of \(\$ 80\). You are able to borrow at a rate: of \(6.50\%\) a. What will be the call's value if the stock price is \(\$ 102\) in one year? What will be the cali's value if the stock price is \(\$ 4\) in one year? (Round your answers to the nearest dollar.) b. What is the hedge ratio you should use? (Round your answer to 4 decimal places.) c. Assume that you can purchase fractional shares of stock. How many shares or stock would you buy? (Round your answer to 4 decimal places.)

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