The COVID-19 Pandemic has resulted in country wide lockdowns and non-essential business closures all around the world. The stock market index has responded to the coronavirus fears with large drops. As of March 17, the S&P 500 fell nearly 30% compared to its record peak set less than a month ago. Though the stock market index has responded to unprecedented shock with large drops, not all industries/companies are impacted to the same extent. For instance, essential businesses such as the supermarkets have also seen a temporary boost in sales from "panic buying". As Bloomberg reported, one New Zealand-based 'supermarket chain said it sold enough food in a single day to feed 10 million people. You are a hedge fund manager, one of your clients overheard that option contracts may an nsurance to the investments and asks your opinions about this.

How to know what price target to buy a stock?

Describe how adding a risk-free security to modern portfolio theory allows investors to do better than the efficient frontier.  Additionally, explain how might the magnitude of the market risk premium impact people's desire to buy stocks?

k) define a protective put.     l) demonstrate an understanding of the position of buying a protective put by identifying the breakeven stock price, the maximum profit, and the maximum loss.     m) discuss the similarities between a protective put and an insurance policy.       n) discuss the similarities between the exercise price in a protective put and the deductible in an insurance policy.        o) demonstrate an understanding of the constructions of a synthetic put by identifying the breakeven stock price, the maximum profit, and the maximum loss.