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You would like to be holding a protective put position on the stock of XYZ Co. to lock in a guaranteed minimum value of $101

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You would like to be holding a protective put position on the stock of XYZ Co. to lock in a guaranteed minimum value of $101 at yearend. XYZ currently sells for $101. Over the next year, the stock price will increase by 9% or decrease by 9%. The T-bill rate is 4%, Unfortunately, no put options are traded on XYZC a. Suppose the desired put option were traded. How much would it cost to purchase? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) b. What would have been the cost of the protective put portfolio? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) c. What portfolio position in stock and T-bills will ensure you a payoff equal to the payoff that would be provided by a protective put with X=101 ? Show that the payoff to this portfolio and the cost of establishing the portfolio match those of the desired protective put. (Do not round Intermediate calculations. Round your final answer to 2 decimal places.) You would like to be holding a protective put position on the stock of XYZ Co. to lock in a guaranteed minimum value of $101 at yearend. XYZ currently sells for $101. Over the next year, the stock price will increase by 9% or decrease by 9%. The T-bill rate is 4%, Unfortunately, no put options are traded on XYZC a. Suppose the desired put option were traded. How much would it cost to purchase? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) b. What would have been the cost of the protective put portfolio? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) c. What portfolio position in stock and T-bills will ensure you a payoff equal to the payoff that would be provided by a protective put with X=101 ? Show that the payoff to this portfolio and the cost of establishing the portfolio match those of the desired protective put. (Do not round Intermediate calculations. Round your final answer to 2 decimal places.)

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