Explain the given statement

Reference no: EM131237568

1. A portfolio is currently worth $10 million and has a beta of 1.0. An index is currently standing at 800. Explain how a put option on the index with a strike price of 700 can be used to provide portfolio insurance.

2. ‘‘Once we know how to value options on a stock paying a dividend yield, we know how to value options on stock indices and currencies.'' Explain this statement.

Reference no: EM131237568

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