6) Assume IBM currently sells for $60 and at the money call options that have a strike price equal to $60 cost and $6 each. An investor has $30,600 to invest and believes a stock is going to go up. The investor is considering two different investment portfolios. 1) a portfolio entirely invested in IBM stocks. 2) a portfolio entirely invested in call options.

a) If the stock price raises to $70, how much will they earn by buying calls versus buying the stock?

Profit of stock portfolio $_____

Profit on a portfolio purely invested in options $______

b) What is the investors return in either case?

Return of stock portfolio: _____%

Return on portfolio purely invested in options: ____%

c) What is the profit for each of the strategies from a) if IBM also pays a $2 per share dividend during this time period?

Profit of stock portfolio: ___%

Profit on a portfolio purely invested in options: ____%

***Please answer all parts and show all work. Thank you!