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

---

Definitions:

Flat Organizational Structure

An organizational layout with few or no levels of intermediate management between staff and executives, facilitating faster decision-making.

Cooperation

The act of working together towards a common goal or purpose.

Subliminal Perception

The process by which stimuli are perceived or absorbed without conscious awareness, potentially influencing attitudes or behaviors.

Conscious Awareness

The state of being aware of one's own existence, sensations, thoughts, surroundings, etc., typically through cognitive processes.