# Consider again Problem 13. The point of purchasing a European option is to limit the risk of a decrease in

## Question:

Consider again Problem 13. The point of purchasing a European option is to limit the risk of a decrease in the per-share price of the stock. Suppose you purchased 200 shares of the stock at \$28 per share and 75 six-month European put options with an exercise price of \$26. Each put option costs \$1.
a. Using data tables, construct a model that shows the value of the portfolio with options and without options for a share price in six months between \$15 and \$35 per share in increments of \$1.00.
b. Discuss the value of the portfolio with and without the European put options.
Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...

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Related Book For

## Essentials of Business Analytics

ISBN: 978-1285187273

1st edition

Authors: Jeffrey Camm, James Cochran, Michael Fry, Jeffrey Ohlmann, David Anderson, Dennis Sweeney, Thomas Williams

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