Question: Question 3 (1 point) Current stock price is 100, which can increase to $110 or decrease to $90. Risk free rate is 5%. Consider a

Question 3 (1 point) Current stock price is 100, which can

Question 3 (1 point) Current stock price is 100, which can increase to $110 or decrease to $90. Risk free rate is 5%. Consider a call with strike $95 that expires after one period. c) To hedge one (long) call, we need to ... shares of stock O sell 0.75 buy 1.33 buy 0.75 O sell 1.33 Question 4 (1 point) Current stock price is 100, which can increase to $110 or decrease to $90. Risk free rate is 5%. Consider a call with strike $95 that expires after one period. d) What will be pay-off of a portfolio that is short a call and buys 0.75 shares of stock in (good, bad) states/scenarios? Pick the closest numbers... (67.5, 67.5) O(-50, -50) O (50,50) (97.5,67.5)

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