1)A Canadian investor owns 500 common shares of Royal Bank (RY) and wants to protect herself against a large drop in the stock's price between now and the end of the year.

i.Should she buy Royal Bank stock put options or call options?

ii.To protect herself with a maximum loss of about 10% below the current market price, what strike price should she choose?

iii.What expiry date should she choose?

iv.How many contracts would she need to buy?

v.How much would it cost her to acquire this hedge based on the "ask" price of the options? (ie what would be the total cost of the option contract(s) premium?)

vi.What is the current price of Royal Bank (RY) shares and what are her 500 shares currently worth? What percentage of that value would she have to spend to hedge with options?