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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, S is $ and a call option expiring in one year has an exercise price, X of $ and is selling at a price, C of $ With $ to invest, you are considering three alternatives.
a Invest all $ in the stock, buying shares.
b Invest all $ in options contracts
c Buy options one contract for $ and invest the remaining $ in a money market fund paying in interest over months per year
What is your rate of return for each alternative for the following four stock prices in months? Leave no cells blank be certain to enter wherever required. Negative amounts should be indicated by a minus sign. Round the "Percentage return of your portfolio Bills options answers to decimal places.
The total value of your portfolio in six months for each of the following stock prices is:
Price
All stock
options
Bills Options
The percentage return of your portfolio in six months for each of the following stock prices is:
Price
All stock
options
Bills Options
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