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Suppose you think app ex stock is going to appreciate substantially value in the next year. Say the stocks current price is S not is
Suppose you think app ex stock is going to appreciate substantially value in the next year. Say the stocks current price is S not is $ and a call option expiring in one year has an exercise price X of $ and is selling at a price not$ with $ to invest your considering three alternatives invest all $ in the stock buying shares invest all $ in options contracts see options one contract for $ and invest the remaining in a money market fund paying annual interestwhat is your rate of return for each alternative for the following for stock prices in one year in terms of dollar returns your price of stock one year from now is
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