Question: Please solve the problems below. A stock sells for $94. The stock can either increase by a factor of 1 . 1 or decrease by

Please solve the problems below. A stock sells for $94. The stock can either increase by a factor of 1 . 1 or decrease by a factor of 0.8. A call option with X = 90 exists on the stock The relevant interest rate is 10.3%. 1. Find and interpret the hedge ratio. 2. Using the hedge ratio, set up a perfectly hedged portfolio Also, show that this portfolio is perfectly hedged. 3. Find the price of the call using the hedge ratio. 4. Find the price of the call using a replicating portfolio

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