Bellflower Co. stock costs $50 today.Use a1step binomial tree to estimate the price of a six-month call on this stock. Assume the price can increase or decrease by 5%every 6 months with equal likelihood.Risk free rate is 3%, the strike is $51.(compound semi-annually) A). Frind the hedge ratio(H) and explain what this means. B) Find the call's value or price today.

Essentials Of Investments
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Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Bellflower Co. stock costs $50 today.Use a1step binomial tree to estimate the price of a six-month call on this stock. Assume the price can increase or decrease by 5%every 6 months with equal likelihood.Risk free rate is 3%, the strike is $51.(compound semi-annually)

A). Frind the hedge ratio(H) and explain what this means.

B) Find the call's value or price today.

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