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Suppose you think Agrium's stock is going to appreciate substantially in value in the next year. Say the stock's current price, So, is $200, and

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Suppose you think Agrium's stock is going to appreciate substantially in value in the next year. Say the stock's current price, So, is $200, and a call option expiring in one year has an exercise price, X, of $200 and is selling at a price, C, of $20. With $20,000 to invest, you are considering three alternatives. a. Invest all $20,000 in the stock, buying 100 shares b. Invest all $20,000 in 1,000 options (10 contracts) c. Buy 100 options (one contract) for $2,000, and invest the remaining $18,000 in a money market fund paying 5% in interest over 6 months (10% per year) What is your rate of return for each alternative for the following four stock prices 6 months from now? (Leave no cells blank - be certain to enter "0" wherever required. Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places. Omit the "$" and "%" signs in your response.) The total value of your portfolio in six months for each of the following stock prices is: $180 $ Price of Stock 6 Months from Now $200 $210 $ $ $220 $ Stock Price All stocks (100 shares) All options (1,000 options) Bills + 100 options The percentage return of your portfolio in six months for each of the following stock prices is: $180 Percentage Return of Portfolio in Six Months $200 $210 g $220 Stock Price All stocks (100 shares) All options (1,000 options) Bills + 100 options

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