1. What is your recommendation and justification for, in percentage terms, of an optimal allocation of $1,000,000 among the three asset classes. The asset classes are U.S. Treasury bonds, U.S. equities and cash.
2. Suppose you purchase 5 put contracts on Testaburger Co. The strike price is $40, and the premium is $3. If, at expiration, the stock is selling for $35 per share, what are your put options worth? What is your net profit?