Managing Risk with Options. An analyst comes up with the following model for the stock of McDonald's (MCD). The stock price is 94$ today. An analyst predicts that in a year from now the outcomes are S1) = 100$ with probability 0.5 25$ with probability 0.5 The annual interest rate is 1%. (a) Compute the risk of the cost of buying one share at time 1. (b) At time 0 sell one put option with strike price X = 50$ and invest the money in bonds. Then, at time 1, close these positions and buy one share of stock. Compute the risk of the cost of this strategy and compare it to your result in (a)