S=50, k=50, r=0.25%, T=3 months \sigma=0.1
a. Find the hedge ratio for a put option using the data provided.
b. Use the hedge ratio to show the loss on a portfolio of 200 shares if the portofolio is hedged with put options. The percentage loss on the shares is 2%.
c. Use the hedge ratio to show the loss on a portfolio of 200 shares if the hedge ratio is used to convert a portion of the shares to T-Bills. The percentage loss on the shares is 2%
d. What is the difference between b and c?