Use the Two-State Put Option Value in This Problem

question 81

Multiple Choice

Use the two-state put option value in this problem.S_O = $100; X = $120; the two possibilities for S_T are $150 and $80.The range of P across the two states is _____ the hedge ratio is _______.

• A)$0 and $40; -4/7
• B)$0 and $50; +4/7
• C)$0 and $40; +4/7
• D)$0 and $50; -4/7
• E)$20 and $40; +1/2

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Definitions:

Self-Regulation

The ability of an individual to manage their thoughts, emotions, and behaviors to achieve long-term goals.

Observational Learning

A learning process through which individuals acquire new behaviors or knowledge by watching and imitating others.

Reproduction

The biological process by which new individual organisms are produced by their parents.

Reinforcement

A process in learning theory used to encourage or establish a desired behavior by offering rewards or consequences.