Problem $16-39($Algo$)$

You would like to be holding a protective put position on the stock of $xYZ$ Company to lock in a guaranteed minimum value of $$240$ at

year$-$end. $xYZ$ currently sells for $$240.$ Over the next year, the stock price will either increase by $7\%$ or decrease by $7\%.$ The T$-$bill rate

is $3\%.$ Unfortunately, no put options are traded on XYZ Company.

Required:

a$.$ How much would it cost to purchase if the desired put option were traded? $($Do not round intermediate calculations. Round your

answer to $2$ decimal places.$)$

Answer is complete but not entirely correct.

b$.$ What would be the cost of the protective put portfolio? $($Do not round intermediate calculations. Round your answer to $2$ decimal

places.$)$

Answer is complete but not entirely correct.