What is the present value of the riskless portfolio

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Madeline Manufacturing Inc.'s current stock price is $45 per share. Call options for this stock exist that permit the holder to purchase one share at an exercise price of $40. These options will expire at the end of 1 year, at which time Madeline's stock will be selling at one of two prices $25 or $50. The risk-free rate is 3.5%. Using the binomial option pricing model, create riskless hedged investment and answer the following questions:

What is the present value of the riskless portfolio? Do not round intermediate calculations. Round your answer to the nearest cent.

Reference no: EM132953083

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