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A stock index is currently 990, the risk free rate is 5%, and the dividend yield on the index is 2%. Use a three step

A stock index is currently 990, the risk free rate is 5%, and the dividend yield on the index is 2%. Use a three step to value and 18-month American put option with a strike price of 1000 when the volatility is 20% per annum.

What position in the stock is initially necessary to hedge the risk of the put option?

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