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Business, 19.08.2020 22:01 steventhecool22

Suppose you think Apple stock is going to appreciate substantially in value in the next year. Say the stockâs current price, S0, is $100, and a call option expiring in one year has an exercise price, X, of $100 and is selling at a price, C, of $10. With $10,000 to invest, you are considering three alternatives. a. Invest all $10,000 in the stock, buying 100 shares.
b. Invest all $10,000 in 1,000 options (10 contracts).
c. Buy 100 options (one contract) for $1,000, and invest the remaining $9,000 in a money market fund paying 4% in interest over 6 months (8% per year).
What is your rate of return for each alternative for the following four stock prices in 6 months? (Leave no cells blank - be certain to enter "0" wherever required. Negative amounts should be indicated by a minus sign. Round the "Percentage return of your portfolio (Bills + 100 options)" answers to 2 decimal places.)
The percentage return of your portfolio in six months for each of the following stock prices is:
Price of stock 6 months from now
Stock price: $80 $100 $110 $120
All stocks (100 shares): % % % %
All options (1000 options):
Bills + 100 options:

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