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Part of the appeal of purchasing options is that they allow investors to gain a high degree of personal leverage when buying secunties. The use

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Part of the appeal of purchasing options is that they allow investors to gain a high degree of personal leverage when buying secunties. The use of leverage increases risk, which means the potential upside and downside of the investment are both amplified. Suppose an investor bought a call option for $3.45 on a single share of Remark Agency Inc. with a strike price of $40.00 when the firm's stock traded at \$42.35. The call option had one year until expiration, One year later, the stock price had incressed to $44.93. The stock price had therafore increased by 6.21%, and an investor who bought the stock and held it for a year would hove earned 6.21%. What return did this investor earn by buying the call option? 37,7050 53.22% 42.13% 44.35% Suppose the stock price had fallen to 336.99. In the following table, indicate the return that a stock investor would have earned by holding Remarik Agency Incis stock. Then indleate the retum that an investor would have earned if she had bought a call option on Remutik Agency incis stock

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