(a) The Company A has a beta of 0.92. The EIBOR rate (risk free rate) is 4% and the expected rate of return on the Financial Market index is 10%. Your estimated/forecasted rate of return on Company A is 11.2 %. Based on your estimated return and other information provided, what action will to take regarding investing in Company A Stock (will you buy or sell this stock)? Explain your answer.

(b) Consider the following information on put and call options for Citigroup: Strike Price: $32.50 Put Price: S2.85 Call Price: $1.65

(i) What would the net value of a protective put position be if the stock price at expiration is $40? (ii) What would the net value of a covered call position be if the stock price at expiration is $40?