4. You are attempting to formulate an investment strategy. 0n the one hand, you think there is great upward potential in the stock market and would like to participate in the upward move if it materializes. However. you are not able to afford substantial stock market losses and so cannot run the risk of a stock market collapse, which you think is also a possibility. Your investment adviser suggests a protective put position: Buy both shares in a market index stock fund and put options on those shares with 3-month expiration and exercise price of WED. The stock index fund is currently selling for $9M. However, your uncle suggests you instead buy a 3-month call option on the index fund with exercise price $34G and buy 3- month T-bills with face value $848\". a. 0n the same graph, draw the payoffs to each of these strategies as a function of the stock fund value in 3 months. (Hint: Think of the options as being on one "share'| of the stock index fund, with the current price of each share of the fund equal to sass.) b. Which portfolio must require a greater initial outlay to establish? (Hint: Does either portfolio provide a nal payout that is always at least as great as the payo of the other portfolio?) c. Suppose the market prices of the securities are as follows: Stock fund :59 T-bill {face value $340} $313 Call {exercise price $340) : $12G Put (exercise price $30) : $6