Question
Assume that at t = 0 a stock has price S = $500 and that a call that matures at T with a strike price
Assume that at t = 0 a stock has price S = $500 and that a call that matures at T with a strike price of X = $500 has premium C = $10.
Assume at the options maturity, t = T, that ST = $550.
Assume that at t = 0 that investor #1 buys 100 shares of stock and sells them at t = T.
Assume that at t = 0 investor #2 buys one call option on the same stock & exercises it at t = T.
What is the ROI (return on investment) for investor #1?
|
10%
| ||
| 25% | ||
| 15% | ||
| 20% |
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Multinational Business Finance
Authors: David K. Eiteman, Arthur I. Stonehill, Michael H. Moffett
12th Edition
0136096689, 978-0136096689
