Question: Data: S 0 = 109; X = 110; 1 + r = 1.08. The two possibilities for S T are 176 and 88. a. The

Data: S₀ = 109; X = 110; 1 + r = 1.08. The two possibilities for S_T are 176 and 88.

a. The range of S is 88 while that of P is 22 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.)

b. Form a portfolio of one share of stock and four puts. What is the (nonrandom) payoff to this portfolio?

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

d. Given that the stock currently is selling at 109, calculate the put value. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

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