You would like to be holding a protective put position on the stock of XYZ Company to

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Question:

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:

.

How much would it cost to purchase if the desired put option were traded?

.

What would be the cost of the protective put portfolio?

Posted Date: May 18, 2024 04:10 PM

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You would like to be holding a protective put position on the stock of XYZ Company to

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