Consider a Portfolio Which Uses an European Index as the Underlying

question 1

Multiple Choice

Consider a portfolio which uses an European index as the underlying asset.The pay offs of the underlying asset in the up node and down node is 1,390 and 1,330 respectively.If the risk-free rate is 3.5% and the pay-offs of structured bond in the up node and down nodes are €214.50 and €169.50 respectively.Calculate the number of units of the underlying asset.

• A)0.75
• B)0.50
• C)0.80
• D)0.70

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Definitions:

Anti-Federalists

Individuals who opposed the ratification of the United States Constitution, fearing a too powerful central government.

Representatives

Individuals elected to serve in a legislative or parliamentary body to act and make decisions on behalf of a larger group or constituency.

Federalists

Advocates for the ratification of the Constitution in 1787 and supporters of a strong federal government, contrasting with Anti-federalists.