Refer to the stock options on Microsoft in the Figure 2.10. Suppose you buy a November expiration call option on 200 shares with the excise price of $140.

Required:

a-2. What is the net profit/loss on your position? (Input the amount as a positive value.)

a-3. What is the rate of return on your position? (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.)

b-1. Would you exercise the call if you had bought the November call with the exercise price $135?

multiple choice 2 Yes No

b-2. What is the net profit/loss on your position? (Input the amount as a positive value.)

b-3. What is the rate of return on your position? (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.)

c-1. What if you had bought the November put with exercise price $140 instead? Would you exercise the put at a stock price of $140?

multiple choice 3 Yes No

c-2. What is the rate of return on your position? (Negative value should be indicated by a minus sign.)

FIGURE 2.10 Stock options on Microsoft, September 4,2019 Note: Microsoft stock price on this day was $137.49