Question: We will derive a two-state put option value in this problem. Data: Sz=$160;X=$170;1+r=1.10. The two possibilities for ST are $190 and $110. Required: a. The

We will derive a two-state put option value in this problem. Data: Sz=$160;X=$170;1+r=1.10. The two possibilities for ST are $190 and $110. Required: a. The range of S is $80 while that of P is $60 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 portfollo? (Round your answer to 2 . decimal places.) c. What is the present value of the portfolio? (Round your answer to 2 decimal places.) d. Given that the stock currently is selling at $160, calculate the put value (Do not round intermediate calculations and round your answer to 2 decimal places.)

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