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You want to buy a stock that is currently seling for 40. You forecast hat in ne year, he socks price will be either s 02 ors· u probabilities. The es a available with an exercise price of $80. You are able to borrow at a rate of 6.50%. You would like to hedge your stock position using the call option. ne arcal option on est a. What will be the calls value if the stock price is $102 in one year? What will be the calls value if the stock price is $4 in one year? (Round your answers to the nearest dollar.) Call value at $102 Call value at $4 b. What is the hedge ratio you should use? (Round your answer to 4 decimal places.) Hedge ratio c. Assume that you can purchase fractional shares of stock. How many shares of stock would you buy? (Round your answer to 4 decimal places.) Shares

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SWER At Exercise Pice- $P0 om Matuw 40 on Horuaiby m Mot al Valueo CALL i Stode Price is 10 m Matuity Valulaf Callas = /alue

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