An investor wants to exactly replicate the put options payoff so he considers to buy X shares of the stock and Y shares of bonds. Suppose the stock price is $60 and the bond price with coupon rate 4% is $100. The stock price will either go up 20% or down 10% in one year. A put option with exercise price of $60 will be expired in one year. Short selling is allowed.

(i) Determine the risk-neutral price D for $1 in the down state.

(ii) Determine the values of X and Y.

(iii)Describe the investment strategy in the combination of stock and bond.

(iv)Calculate the put option price.