1. Gerold purchased 2 put option contracts at an option premium of $0.95 and a strike price of $40. At expiration, the stock price was $41.25 per share. What is his percentage return?
2. If you formed a portfolio which included a large number of low beta stocks (stocks with betas less than 1.0 but greater than -1.0), the portfolio would itself have a beta coefficient that is equal to the weighted average beta of the stocks in the portfolio, so the portfolio would have a relatively low degree of risk.
True or False