In a One-Period Binomial Model,assume That the Current Stock Price

question 21

Multiple Choice

In a one-period binomial model,assume that the current stock price is $100,and that it will rise to $115 or fall to $80 after three months.If risk-free investment has a gross return of 1.005 per three month time-step,what is the best replicating portfolio of one hundred 101-strike three-month put options from the following options?

• A)Short 60 shares of stock and long 69 units of $1 bonds.
• B)Short 65 shares of stock and long 70 units of $1 bonds.
• C)Short 65 shares of stock and short 69 units of $1 bonds.
• D)Short 65 shares of stock and short 70 units of $1 bonds.

---

Definitions:

Central Nervous System

The part of the nervous system consisting of the brain and spinal cord, responsible for processing and transmitting neural information.

Spinal Nerves

Nerves that emerge from the spinal cord, carrying motor, sensory, and autonomic signals between the spinal cord and the body.

Peripheral Process

The process by which peripheral nerves relay information from the body's extremities to the central nervous system and vice versa.

Unipolar Neurons

Neurons that have a single extension from their cell body, which branches into a peripheral process and a central process, often found in sensory pathways.