Question: We will derive a two-state put option value in this problem. Data: S0=$170;X=$180;1+r=110. The two possibilities for S are $210 and $90. Required: a. The

We will derive a two-state put option value in this problem. Data: S0=$170;X=$180;1+r=110. The two possibilities for S are $210 and $90. Required: a. The range of S is $120 while that of P is $90 across the two states. What is the hedge ratio of the put? (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.) b. Form a portfolio of three shares of stock and four puts. What is the (nonrandom) payoff to this portfolio? (Round your answer to 2 decimal places.) c. What is the present value of the portfolio? (Round your answer to 2 decimal places.) d. Glven that the stock currently is selling at $170, calculate the put value. (Do not round intermediate calculations and round your answer to 2 decimal places.)

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