What is the hedge ratio

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Interest rates are 10% per annum continuously compounded. The price of the stock is currently $100 per share. In one year the price will be either $125 per share or $75 per share. Usinga one period Binomial Tree Model, find the value, now, of the call option with exercise price of 100.

What is the hedge ratio?

Now calculate the answers for exercise prices of 90 and 110.

Reference no: EM132408193

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