The common stocks of DEF Inc. currently sell for P38. There is a call option...
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The common stocks of DEF Inc. currently sell for P38. There is a call option on this stock with an exercise (strike) price of P40. At the end of year 1, there is a 50% chance that the price will be P35, and another 50% chance that it will be P55. The risk-free rate of return is 5%. What is the value of the riskless hedge portfolio today?
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