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Intro An investor believes that the Cisco stock price is going to increase in the following 12 months from the current stock price of $200.
Intro An investor believes that the Cisco stock price is going to increase in the following 12 months from the current stock price of $200. Call options on Cisco stock expiring in 12 months have a strike price of $224 and sell at a premium of $20 each. The investor has $16,000 to invest, and is considering 3 alternatives: 1. Purchase 800 call options. 2. Purchase 80 shares. 3. Invest $14,400 in a money market fund returning 7% per year and buy 80 call options with the remaining money. Assume that the stock price will be $231 per share after 12 months. Part 1 "Attempt 1/10 for 10 pts. What will be the investor's rate of return for alternative 1? 2+ decimals Submit Part 2 Attempt 1/10 for 10 pts. What will be the investor's rate of return for alternative 2? 3+ decimals Submit Part 3 | Attempt 1/10 for 10 pts. What will be the investor's rate of return for alternative 3? 5+ decimals Submit
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