How many puts would the investor need to buy

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Q1. What is the price of a 0.75 year European put option on a dividend-paying stock, where the stock price is $ 58, the strike price is $ 70, and a dividend of $ 0.54 is expected in 0.25 years? The risk-free interest rate is 0.05 per annum for all maturities given in decimal places. Provide the answer to two decimal places.

Q2. Assume that an investor who owns a diversified portfolio with a current market value of $750,000 and a Beta = 1.0 wishes to buy protect "protective puts" to prevent the portfolio value dropping 6.66 percent below its current value. The current value of the ASX200 index is 3750. How many puts would the investor need to buy (rounded to the nearest whole number)? All contracts have a value of $25 per index point.

Reference no: EM133004792

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