Suppose you think Apple stock is going to appreciate substantially in value in the next year. Say the stocks current price, S₀, is $100, and the 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 three alternatives:

a. Invest all $10,000 in the stock, buying 100 shares.

b. Invest all $10,000 in 1,000 options (10 contracts).

c. Buy 100 options (one contract) for $1,000 and invest the remaining $9,000 in a money market fund paying 4% interest annually.

a. Calculate the value of the investment for stock price one year from now? (Leave no cells blank - be certain to enter "0" wherever required.)

The Prices are $80, $100, $110, $120

All stocks(100 shares)

All Options (1000 Shares)

Bills + 100 options

b. Calculate the rate of return on investment for stock price one year from now? (Leave no cells blank - be certain to enter "0" wherever required. Negative values should be indicated by a minus sign. Round your answers to 1 decimal place.)

The Prices are $80, $100, $110, $120

All stocks(100 shares)

All Options (1000 Shares)

Bills + 100 options