Question
You would like to be holding a protective put position on the stock of Armor Inc. to lock in a guaranteed minimum value of $60
You would like to be holding a protective put position on the stock of Armor Inc. to lock in a guaranteed minimum value of $60 at year-end. Armor Inc. currently sells for $60. Over the next year, the stock price will either increase by 10% or decrease by 10%. The T-bill rate is 5%. Unfortunately, no put options are traded on Armor Inc..
Required:
a. How much would it cost to purchase if the desired put option were traded? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
cost of purchase______
b. What would be the cost of the protective put portfolio? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
cost of protective put portfolio ______
PLEASE ANSWER QUICK ASAPPPP
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