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 $

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?
b. What would be the cost of the protective put portfolio?

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