Rachel is considering an investment in Yonan Communications, whose stock currently sells for $$70.$ A put option on Yonan's stock, with an exercise price $$65,$ has a market

of $$3\mathrm{.}12.$ Meanwhile, a call option on the stock with the same exercise price and time until expiration has a market value of $$9\mathrm{.}42.$ The market believes that at the expiration of the

options, the stock price will be $$60$ or $$75$ with equal probability.

a$.$ What is the premium associated with the put option? The call option? Round your answers to the nearest cent.

The premium associated with the put option: $

The premium associated with the call option: $

b$.$ If Yonan's stock price increases to $$75,$ what would be the return to an investor who bought a share of the stock? If the investor bought a call option on the stock? If the

investor bought a put option on the stock? Round your answers to two decimal places.

c$.$ If Yonan's stock price decreases to $$60,$ what would be the return to an investor who bought a share of the stock? If the investor bought a call option on the stock? If the

investor bought a put option on the stock? Round your answers to two decimal places.

d$.$ If Rachel buys $0\mathrm{.}5$ share of Yonan Communications and sells one call option on the stock, has she created a riskless hedged investment? What is the total value of her

portfolio under each scenario? Round your answers to the nearest cent.

Rachel's investment strategy would yield a payoff of $

$,$ if the ending stock price is $$60\mathrm{.}00.$ Her investment strategy has a payoff of $$,,$ if the ending

stock price is $$75\mathrm{.}00.$ The strategies

$]$ payoffs; therefore, this

a riskless hedged portfolio.

e$.$ If Rachel buys $0\mathrm{.}8$ share of Yonan Communications and sells one call option on the stock, has she created a riskless hedged investment? What is the total value of her

portfolio under each scenario? Round your answers to the nearest cent.

Rachel's investment strategy would yield a payoff of $

$,$ if the ending stock price is $$60\mathrm{.}00.$ Her investment strategy has a payoff of $$,,$ if the ending

stock price is $$75\mathrm{.}00.$ The strategies

payoffs; therefore, this $-$ Select$-$ a riskless hedged portfolio.