(1) Suppose you think Apple stock is going to appreciate substantially in value in the next year. Assume the current stock price (So) is $200, and a European call option expiring in one year has an exercise price (x) of $210 and is selling at a price (C) of $20. With $10,000 to invest, you are considering three alternatives. a. Invest all $10,000 in the stock, buying 50 shares. b. Invest all $10,000 in 500 options (5 contracts) C. Buy 200 options (2 contracts) for $4,000 and invest the remaining $6,000 in a money market fund paying 4% annual interest. (2) What is your rate of return for each alternative for different stock prices in one year (ST)? Assume the possible stock prices in one year (ST) are from $160 to $260, with a step size of $10. Summarize your results in a table and plot them in a chart. (3) Now consider a European put option with the same exercise price and expiration date on the same stock. This put option is currently sold with a price of $30. Do you think it is overpriced or underpriced? Support your conclusion