We will derive a two-state put option value in this problem. Data: S₀ = 180; X = 190; 1 + r = 1.1. The two possibilities for S_T are 210 and 110.

a.	The range of S is 100 while that of P is 80 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.)

Hedge ratio

b-1.	Form a portfolio of 4 shares of stock and 5 puts. What is the (nonrandom) payoff to this portfolio?(Round your answer to 2 decimal places.)

Nonrandom payoff

$

b-2.	What is the present value of the portfolio? (Round your answer to 2 decimal places.)

Present value

$

c.	Given that the stock currently is selling at 180, calculate the put value. (Round your answer to 2 decimal places.)

Put value

$

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