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Suppose you think Agriums stock is going to appreciate substantially in value in the next year. Say the stocks current price is $100, and a
Suppose you think Agriums stock is going to appreciate substantially in value in the next year. Say the stocks current price is $100, and a call option expiring in one year has an exercise price, X, of $100, and is selling at a price, C, of $10. With $10,000 to invest,
You are considering the following investment strategy:
Invest all $10,000 in 1,000 options (10 contracts), what is the rate of return if in one year (on the options expiration date) the stock price turns out to be $120?
A. | 20% | |
B. | 100% | |
C. | 200% | |
D. | 150% |
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