Question: would you please answer Only Q 5 in Excel with details? Thanks A put option in finance allows you to sell a share of stock
would you please answer Only Q 5 in Excel with details? Thanks
A put option in finance allows you to sell a share of stock at a given price in the future. There are different types of put options. A European put option allows you to sell a share of stock at a given price, called the exercise price, at a particular point in time after the purchase of the option. For example, suppose you purchase a six-month European put option for a share of stock with an exercise price of $26. If six months later, the stock price per share is $26 or more, the option has no value. If in six months the stock price is lower than $26 per share, then you can purchase the stock and immediately sell it at the higher exercise price of $26. If the price per share in six months is $22.50, you can purchase a share of the stock for $22.50 and then use the put option to immediately sell the share for $26. Your profit would be the difference, $26- $22.50 = $3.50 per share, less the cost of the option. If you paid $1.00 per put option, then your profit would be $3.50 - $1.00 = $2.50 per share. B 1 European Put Option 2 3 Parameters 4 Costs of Put Option 5 Exercise Price 6 Horizon (months) 7 8 Price End of Horizon 9 310 Model $1.00 $26.00 6 $22.50 4. Use data tables to 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. (25%) 5. Discuss the value of the portfolio with and without the European put options, Which one (with or without) is more profitable? (10%) 2

Step by Step Solution
There are 3 Steps involved in it
1 Expert Approved Answer
Step: 1 Unlock
Question Has Been Solved by an Expert!
Get step-by-step solutions from verified subject matter experts
Step: 2 Unlock
Step: 3 Unlock
