Question: I cannot figure out b-1 and C We will derive a two-state put option value in this problem. Data. Se-240; X = 250; 1 +

I cannot figure out b-1 and C

I cannot figure out b-1 and C We will derive a two-state

We will derive a two-state put option value in this problem. Data. Se-240; X = 250; 1 + r= 1.1. The two possibilities for ST are 270 and 170. a. The range of S is 100 while that of P is 80 across the two states. What is the hedge ratio of the put? (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.) Hedge ratio b-1. Form a portfolio of 4 shares of stock and 5 puts. What is the (nonrandom) payoff to this portfolio? (Round your answer to 2 decimal places.) 80 Nonrandom payoff 080 b-2. What is the present value of the portfolio? (Round your answer to 2 decimal places.) Present value S 981.82 c. Given that the stock currently is selling at 240, calculate the put value. (Round your answer to 2 decimal places.) Put value 112.36

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