QUESTION 1a) Suppose you own 10,000 shares that are worth 50 each

. i) Evaluate how put options can be used to provide you with insurance against a decline in the value of your holding over the next four months. ii) Construct a payoff diagram to illustrate your answer.

(b) Suppose that zero interest rates with continuous compounding are as follows:

Maturity (years)	rate per annum %
1	2.0
2	3.0
3	3.7
4	4.2
5	4.5

Calculate forward interest rates for the second, third, fourth, and fifth years.