Calculate your pre-tax rate of return (profit divided by investment) in each of these scenarios (SHOW YOUR WORK):

1. buy 1,000 shares of ABC common stock at $50 and sell at $60 one year later.
2. buy 1,000 shares of ABC common stock at $50, borrowing 50% of the amount necessary to buy it, at a 2% interest rate, sell the stock at $60 one year later, paying back the loan at the same time.
3. buy listed options at $400 for 1,000 shares of ABC, giving you the right but not the obligation to buy the shares at $50 one year later, you exercise the option one year later when the stock price is $60. Also, use the Long Call chart (from the CBOE material in this PDF) to explain what is going on

Profit + 1 Profit = Unlimited / Loss = Limited Increasing Underlying Stock- Price Loss - Long Call