We will derive a two$-$state put option value in this problem. Data: $S_0=$$$100$;$x=$$$110$;$1+r=1\mathrm{.}10.$ The two possibilities for $S_T$ are $$130$ and $$80.$

Required:

a$.$ The range of $S$ is $$50$ while that of $P$ is $$30$ across the two states. What is the hedge ratio of the put? Note: Negative value should be indicated by a minus sign. Round your answer to $2$ decimal places.

Hedge ratio $,(0\mathrm{.}60)$

b$.$ Form a portfolio of three shares of stock and five puts. What is the $($nonrandom$)$ payoff to this portfolio? Note: Round your answer to $2$ decimal places.

Nonrandom payoff $$

c$.$ What is the present value of the portfolio?

Note: Round your answer to $2$ decimal places.

$$

$$

d$.$ Given that the stock currently is selling at $$100,$ calculate the put value.

Note: Do not round intermediate calculations and round your answer to $2$ decimal places.

Patralu $$We will derive a two$-$state put option value in this problem. Data: $S_0=$$$100$;$x=$$$110$;$1+r=1\mathrm{.}10.$ The two possibilities for $S_T$ are $$130$ and $$80.$

Required:

a$.$ The range of $S$ is $$50$ while that of $P$ is $$30$ across the two states. What is the hedge ratio of the put? Note: Negative value should be indicated by a minus sign. Round your answer to $2$ decimal places.

Hedge ratio $,(0\mathrm{.}60)$

b$.$ Form a portfolio of three shares of stock and five puts. What is the $($nonrandom$)$ payoff to this portfolio? Note: Round your answer to $2$ decimal places.

Nonrandom payoff $$

c$.$ What is the present value of the portfolio?

Note: Round your answer to $2$ decimal places.

$$

$$

d$.$ Given that the stock currently is selling at $$100,$ calculate the put value.

Note: Do not round intermediate calculations and round your answer to $2$ decimal places.

Patralu $$