Answered step by step
Verified Expert Solution
Question
1 Approved Answer
please help with red cells Suppose you think AppX stock is going to appreciate substantially in value in the next year. Say the stock's current
please help with red cells
Suppose you think AppX stock is going to appreciate substantially in value in the next year. Say the stock's current price, So, is $60, and a call option expiring in one year has an exercise price, of $60 and is selling at a price, C, of $10. With $15,000 to invest, you are considering three alternatives. a. Invest all $15,000 in the stock, buying 250 shares. b. Invest all $15,000 in 1,500 options (15 contracts). c. Buy 100 options (one contract) for $1,000, and invest the remaining $14,000 in a money market fund paying 5% in interest over 6 months (10% per year). What is your rate of return for each alternative for the following four stock prices in 6 months? (Leave no cells blank - be certain to enter "0" wherever required. Negative amounts should be indicated by a minus sign. Round the "Percentage return of your portfolio (Bills + 100 options)" answers to 2 decimal places.) The total value of your portfolio in six months for each of the following stock prices is: Answer is complete and correct. Price of Stock 6 Months from Now Stock Price $ 40 $ $ 60 15,000 70 17,500 80 20,000 10,000 All stocks (250 shares) All options (1,500 options) 0 0 15,000 30,000 Bills + 100 options 14,700 14,700 15,560 16,560 The percentage return of your portfolio in six months for each of the following stock prices is: X Answer is complete but not entirely correct. Price of Stock 6 Months from Now Stock Price 40 $ 60 S 70 $ All stocks (250 shares) (33)% 0 % 17 % All options (1,500 options) 0 Bills + 100 options (2.00) X $ (100) (2.00) (100) (2.00) $ 80 33 % 100 (2.00) X Suppose you think AppX stock is going to appreciate substantially in value in the next year. Say the stock's current price, So, is $60, and a call option expiring in one year has an exercise price, of $60 and is selling at a price, C, of $10. With $15,000 to invest, you are considering three alternatives. a. Invest all $15,000 in the stock, buying 250 shares. b. Invest all $15,000 in 1,500 options (15 contracts). c. Buy 100 options (one contract) for $1,000, and invest the remaining $14,000 in a money market fund paying 5% in interest over 6 months (10% per year). What is your rate of return for each alternative for the following four stock prices in 6 months? (Leave no cells blank - be certain to enter "0" wherever required. Negative amounts should be indicated by a minus sign. Round the "Percentage return of your portfolio (Bills + 100 options)" answers to 2 decimal places.) The total value of your portfolio in six months for each of the following stock prices is: Answer is complete and correct. Price of Stock 6 Months from Now Stock Price $ 40 $ $ 60 15,000 70 17,500 80 20,000 10,000 All stocks (250 shares) All options (1,500 options) 0 0 15,000 30,000 Bills + 100 options 14,700 14,700 15,560 16,560 The percentage return of your portfolio in six months for each of the following stock prices is: X Answer is complete but not entirely correct. Price of Stock 6 Months from Now Stock Price 40 $ 60 S 70 $ All stocks (250 shares) (33)% 0 % 17 % All options (1,500 options) 0 Bills + 100 options (2.00) X $ (100) (2.00) (100) (2.00) $ 80 33 % 100 (2.00) XStep by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started