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Suppose you think AppX stock is going to appreciate substantially in value in the next year. Say the stock s current price, S 0 ,

Suppose you think AppX stock is going to appreciate substantially in value in the next year. Say the stocks current price, S0, is $125, and a call option expiring in one year has an exercise price, X, of $125 and is selling at a price, C0, of $8. With $16,000 to invest, you are considering three alternatives.
Invest all $16,000 in the stock, buying 128 shares.
Invest all $16,000 in 2,000 options (8 contracts).
Buy 100 options (one contract) for $800, and invest the remaining $15,200 in a money market fund paying 5% annual interest.
What is your rate of return for each alternative for the following four stock prices in one year?

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