Answer:
d. The price will stay the same, but the quantity will increase.
Explanation:
When the demand and supply both fall, the equilibrium quantity will definately fall but the price will remain the same. The new supply adapts to the reduction of the demand.
If x is 12 the answer is -12
Answer:
Buy 0.8 shares for each option purchased
Explanation:
Calculation to determine What is necessary to hedge the position
Using this formula
N=Vu-Vd/U-D
U = stock price in case of an up move = $36
D = stock price in case of an down move = $26
VU = put option value if stock goes up = $0
VU = put option value if stock goes down = $32 - $26 = $6
Using this formula
N=
−
V
U
−
V
D
U
−
D
N
=
−
0
−
6
36
−
26
N
Now let calculate What is necessary to hedge the position
Value =74 x + 6
Hence,
90x=74x + 6,
x=6/(90-74)
x=6/16
x=.375