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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 $40, 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 $40, and a call option expiring in one year has an exercise price, X, of $40 and is selling at a price, C, of $14. With $12,600 to invest, you are considering three alternatives. a. Invest all $12,600 in the stock, buying 315 shares b. Invest all $12,600 in 900 options (9 contracts) c. Buy 100 options (one contract) for $1,400, and invest the remaining $11,200 in a money market fund paying 5% in interest over 6 months (10% per year) What is your rate of return for each alternative for the following four stock prices 6 months from now? (Leave no cells blank - be certain to enter "0" wherever required. Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places. Omit the "$" and "%" signs in your response.) The total value of your portfolio in six months for each of the following stock prices is: $35 Price of Stock 6 Months from Now $40 $50 $ $60 $ Stock Price All stocks (315 shares) All options (900 options) Bills + 100 options II The percentage return of your portfolio in six months for each of the following stock prices is: Percentage Return of Portfolio in Six Months $ 40 $50 $ 35 $ 60 8 Stock Price All stocks (315 shares) All options (900 options) Bills + 100 options

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