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Problem 19 * >> Intro An investor believes that the Cisco stock price is going to increase in the following 12 months from the current
Problem 19 * >> 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 $14,000 to invest, and is considering 3 alternatives: 1. Purchase 700 call options. 2. Purchase 70 shares. 3. Invest $12,600 in a money market fund returning 7% per year and buy 70 call options with the remaining money. Assume that the stock price will be $235 per share after 12 months. Part 1 Attempt 1/8 for 10 pts. What will be the investor's rate of return for alternative 12 2-decimals Problem 20 Intro You have $40,000 to invest. You are thinking of either buying 537 shares of Ford stock for $74.41 each, or buying 25,157 call options on Ford stock that expire in six months, have an exercise price of $80 and cost $1.59 each. Part 1 | Attempt 1/8 for 10 pts. What is your profit if you buy the shares and the stock price is $20 in six months (in $)? p+decimals Submit
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