16. You are faced with the probability distribution of the HPR on the stock market index fund given in Spreadsheet 5.1 of the text. Suppose the price of a put option on a share of the index fund with excrcise price of $110 and time to expiration of I year is $12. a. What is the probability distribution of the HPR on the put option? b. What is the probability distribution of the HPR on a portfolio consisting of one share of the inder fund and a put option? c. In what sense does buying the put option constitute a purchase of insunance in this case? 17. Take as given the conditions described in the previous problem, and suppose the risk-free interest rate is 6% per year. You are contemplating investing $107.55 in a 1-year CD and simultaneously buying a call option on the stock market index fund with an exercise price of $110 and expiration of 1 year. What is the probahility distribution of your dollar return at the end of the year? 18. Consider these long-term imvestmeat data: - The price of a 10 -year $100 par value zero-coupon inflation-indexed bond is $84.49. - A real-estate property is expected to yield 2% per quarter (nominal) with a SD of the (effective) quartetly rate of 10%. a. Compute the annual rate of return on the real (i.e., inflation-indexed) bond. b. Compute the continuously compounded annual risk premium on the real-estate investment. c. Use the formula in footnote 17 and Excel's Solver or Goal Seck to find the standard deviation of the continuously compounded annual excess return on the real-estate investment. d. What is the probability of loss or shortfall after 10 years