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It is October 5, 2015, and you own IBM stock. You would like to insure that the value of your holdings will not fall significantly.
It is October 5, 2015, and you own IBM stock. You would like to insure that the value of your holdings will not fall significantly. Using the data in and expressing your answer in terms of a percentage of the current value of your portfolio: IBM (INTL BUSINESS MACHINES) b. What will it cost to insure that the value of your holdings will not fall below $140 per share between now and the third Friday in November? (Select the best choice below.) A. The ask price of a protective put with a strike price of $140 that expires on the third Friday of November is $0.36. The cost to insure the value of your holdings will not fall is $0.36/$149.04=0.0024 or 0.24%. B. The ask price of a protective put with a strike price of $140 that expires on the third Friday of November is $8.80. The cost to insure the value of your holdings will not fall is $8.80/$149.04=0.05904 or 5.90%. C. The ask price of a protective put with a strike price of $140 that expires on the third Friday of November is $2.00. The cost to insure the value of your holdings will not fall is $2.00/$149.04=0.0134 or 1.34%. D. The ask price of a protective put with a strike price of $140 that expires on the third Friday of November is $3.35. The cost to insure the value of your holdings will not fall is $3.35/$149.04=0.0248 or 2.25%. c. What will it cost to insure that the value of your holdings will not fall below $145 per share between now and the third Friday in November
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