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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, so, is $200, and

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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, so, is $200, and a call option expiring in one year has an exercise price, X, of $200 and is selling at a price, C, of $10. With $20,000 to invest, you are considering three alternatives. a. Invest all $20,000 in the stock, buying 100 shares. b. Invest all $20,000 in 2,000 options (20 contracts). c. Buy 100 options (one contract) for $1,000, and invest the remaining $19,000 in a money market fund paying 4% in interest over 6 months (8% per year). What is your rate of return for each alternative for the following four stock prices in 6 months? (Leave no cells blank - be certain to enter "0" wherever required. Negative amounts should be indicated by a minus sign. Round the Percentage return of your portfolio (Bills + 100 options)" answers to 2 decimal places.) The total value of your portfolio in six months for each of the following stock prices is: Price of Stock 6 Months from Now 200 $ Stock Price $ 180 $ 220 All stocks (100 shares) All options (2,000 options) Bills 100 options 210 $ The percentage return of your portfolio in six months for each of the following stock prices is: Price of Stock 6 Months from Now Stock Price $ 180 $ 200 $ 210 $ 220 All stocks (100 shares) % % All options (2,000 options) Bills+ 100 options % %

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