A put option gives you the right (but not the obligation) to sell a given underlying financial asset for a given strike price. You have uncertainty: tomorrow the underlying financial asset may be worth 200 with probability 1=3 (scenario h), 100 with probability 1=3 (scenario m), and 50 with probability 1=3 (scenario l). The strike price is 110. The representative consumer has discount factor = 0:9. In which scenario(s) is the put in the money? (i.e. in which scenario(s) you want exercise your right to sell at the strike price?)

Calculate the value of the put option if the representative consumer has linear utility u(c) = gama c

Calculate the value of the put option if the representative consumer has utility u(c) = log(c), and consumption growth c2j c1 is expected to be 15% in the scenario h, 0% in scenario m, -5% in scenario