The following statement is for Question $1,2$ and $3$:

We will derive a two$-$state put option value in this problem. We have the following information:

$S_{0}100$;$x=110$;$1+r_f=1\mathrm{.}10.$ The two possibilities for $S_T$ are $120$ and $80.$

Construct a portfolio of three shares of stock and four puts. What is the $($nonrandom$)$ pay$-$off to this portfolio?

What is the present value of the portfolio?

Pay$-$off $=350$ and $PV=327\mathrm{.}27$

Pay$-$off $=350$ and PV $=318\mathrm{.}18$

Pay$-$off $=360$ and PV $=327\mathrm{.}27$

Pay$-$off $=360$ and PV $=318\mathrm{.}18$