Imagine you have $5000 you want to invest. Swift corporation’s stock is currently selling for $100. The stock price will either go up to $110 or go down to $95 with equal probability.
Consider the following potential strategies:

A) Put the $5000 in a risk free T-bill that gets 4 percent.
B) Short sell $5000 of stock. Put all $10000 in T-bills that earns 4 percent.

For each of those strategies:

I) What are all possible payoffs?
II) What are all possible returns?
III) What is the expected return?
IV) What is the variance of the returns?