Question: Data: S 0 = 108; X = 115; 1 + r = 1.12. The two possibilities for S T are 136 and 80. a. The

Data: S₀ = 108; X = 115; 1 + r = 1.12. The two possibilities for S_T are 136 and 80.

a. The range of S is 56 while that of P is 35 across the two states. What is the hedge ratio of the put? (Round your answer to 2 decimal places. Negative value should be indicated by a minus sign.)

1. Hedge Ratio =

b. Form a portfolio of five shares of stock and eight puts. What is the (nonrandom) payoff to this portfolio?

1. Nonrandom Payoff =

c. What is the present value of the portfolio? (Round your answer to 2 decimal places.)

1. Present Value =

d. Given that the stock currently is selling at 108, calculate the put value. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

1. Put Value =

I NEED to see this and understand how it is worked out by hand (pen & paper) NOT in excel. Please provide all work in arriving at each solution so I can learn how to do this problem. Thanks!

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