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C. Montgomery Burns just bought a controlling interest in Springfield Nuclear, a local utility. You have observed Mr. Burns' ownership style and you predict that
C. Montgomery Burns just bought a controlling interest in Springfield Nuclear, a local utility. You have observed Mr. Burns' ownership style and you predict that Springfield's share price will rise. You are considering either buying shares of Springfield or purchasing call options on the shares. The stock price is currently $30. The call option expires in three months, has a strike price of $30, and has a premium of $4.00 (per share). Assume that the stock price rises to $40 by the maturity date of the option. What is the rate of return on each investment? Express your answer in percentage form rounded to one decimal place. Option return: 900.0 % % Stock return: 133.3 X % Check Answers
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