You would like to be holding a protective put position on the stock of xyz co. to lock in a guaranteed minimum value of $100 at year-end. xyz currently sells for $100. over the next year, the stock price will either increase by 10% or decrease by 10%. the t-bill rate is 5%. unfortunately, no put options are traded on xyz co. a. suppose the desired put option were traded. how much would it cost to purchase? b. what would have been the cost of the protective put portfolio? c. what portfolio position in stock and t-bills will ensure you a payoff equal to the payoff that would be provided by a protective put with x = $100? show that the payoff to this portfolio and the cost of establishing the portfolio match those of the desired protective put.

Arguments made against free trade include all of the following exceptdumping is an unfair trade practice that puts domestic producers of substitute goods at a disadvantage that they should be protected against. national defense considerations justify producing certain goods domestically whether the country has a comparative advantage in their production or not. free trade is inflationary and should be restricted in the domestic interest. if foreign governments subsidize their exports, foreign firms that export are given an unfair advantage that domestic producers should be protected against. infant industries should be protected from free trade so that they may have time to develop and compete on an even basis with older, more established foreign industries.