You Would Like to Hold a Protective Put Position on the Stock

question 73

Multiple Choice

You would like to hold a protective put position on the stock of Avalon Corporation to lock in a guaranteed minimum value of $50 at year-end. Avalon currently sells for $50. Over the next year, the stock price will increase by 10% or decrease by 10%. The T-bill rate is 5%. Unfortunately, no put options are traded on Avalon Co.
What would have been the cost of a protective put portfolio?

• A) $48.81
• B) $51.19
• C) $52.38
• D) $53.38

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Definitions:

Hermaphrodites

Organisms that have both male and female reproductive organs, allowing them to perform both roles in reproduction.

Intersexed

Individuals having reproductive or sexual anatomy that doesn’t fit the typical definitions of female or male, often due to genetic, hormonal, or anatomical variations.

Ambiguous Genitals

A condition present at birth where the external genitalia do not have the typical appearance of either male or female, making it difficult to assign a baby's sex.

Baby Brenda

A pseudonym used in case studies involving gender reassignment and socialization, highlighting the complexities of gender identity formation.