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Data: S0 = 120; X = 126; 1 + r = 1.05. The two possibilities for ST are 150 and 102.
1. The range of S is 48, while that of C is 24 across the two states. What is the hedge ratio of the call? (Round your answer to 2 decimal places.)
2. Calculate the value of a call option on the stock with an exercise price of $126. (Do not use continuous compounding to calculate the present value of X in this example because we are using a two-state model here, not a continuous-time Black-Scholes model.)
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