Madeline Manufacturing Inc.s current stock price is $45 per share. Call options for this stock...
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Madeline Manufacturing Inc.s current stock price is $45 per share. Call options for this stock exist that permit the holder to purchase one share at an exercise price of $40. These options will expire at the end of 1 year, at which time Madelines stock will be selling at one of two prices $20 or $55. The risk-free rate is 3%. Using the binomial option pricing model, create a riskless hedged investment and answer the following questions:
What is the cost of the stock in the riskless portfolio? Do not round intermediate calculations. Round your answer to the nearest cent.
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