Equitable Insurance Company offers a fixed indexed annuity to Nick. The annuity has a cap of 10% and a floor of 3%. Nick invests $10,000 in the annuity. Assume S\&P500 trades at $10,000 a, Equitable hedges the risk by buying an European call option that expires in a year at a strike price of $10,000 and Investing Nick's money in a safe corporate bond that yields 1%. Equitable pays $300 for the call premium. What return for the S\&P 500 will make Equitable break even cashflow in the first year? break-even cash flow = = call payoff without the premium - call premium + interest earned on the principal 9% 12% 10%