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help Rachel is considering an investment in Yonan Communications, whose stock currently seils for 555. A put option on Yonan's stock, with an exercise price
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Rachel is considering an investment in Yonan Communications, whose stock currently seils for 555. A put option on Yonan's stock, with an exercise price or s50, has a market value of 53.17. Meanwhile, a call on the stock with the same exercise price and time until expiration has a market value of $9.41. The market believes that at the expiration of the cptions, the stock price will be $45 or $60 with equal probabiity. The data has been collected in the Microsoft Excel Online fle below. Open the spreadsheet and perform the requifed analysis fo answer the questions below. a. What is the premium associated with the put option? The call option? Do not round intermediate calculations: Round your answers to the nearest cent: The premium associated with the put option: $ The premium associated with the call option: 5 b. If Yonan's stock price increases to 360 , what would be the return to an investoc who bought a share of the stock? If the investor bought a call option on the stock? If the ifvestor bought a put option on the stock? Do not round intermediate calculations. Round your answers to two decimal places. 6. If Yonan's stock price decreases to s45, what would be the return to an investor who bought a share of the stock? if the investor beught a call option on the stock? if the Investor bought a put option on the stock? Do not round intermediate calculations. Hound your answers to two decimal places. d. If Rachel buys 0.4 share of Yonan Communications and sells one call option on the stock, has she created a riskless hedged investment? What is the fotal value of her portfolio under each scenarlo? Do not round intermediate calculations. Round your answers to the nearest cent. Rschel's investment strategy would yield a payolf of s price is $60.00. The sthutegies identical payolis; therefore, this 2. If Fachel buys 0.7 share of Yonan Communications and sels one call option on the stock, has she created a rigklest hedged inventment? What is the total value of her portfolo. under each scenatio? Do not round intermediate calculations. Found your answers to the nearest cent. facheis investment strategy nould yield a phroff of s price is 50000 . The strstegies? identical prroffs, therefore, this Step by Step Solution
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