What is the price of european call option

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1. Suppose you have a stock portfolio worth $100,000, with B=2. The current S&P Index is 2,000. If your tolerable loss is 10%, how many puts should you buy to hedge against large losses in the value of your stocks?

2. The price of a European put that expires in six months and has a strike price of $60 is $4. The underlying stock price is $58, and a dividend of $1.00 is expected in two months. The term structure is flat, with all risk-free interest rates being 10%. What is the price of a European call option that expires in six months and has a strike price of $60?

Reference no: EM132055103

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