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Suppose you think AppX stock is going to appreclate substantlally In value In the next year. Say the stock's current price, s, Is $50, and
Suppose you think AppX stock is going to appreclate substantlally In value In the next year. Say the stock's current price, s, Is $50, and a call option expiring in one year has an exercise price, X, of $50 and is selling at a price, C, of $16. With $20,800 to invest, you are considering three alternatlves. a. Invest all $20,800 in the stock, buylng 416 shares. b. Invest all $20,800 in 1,300 options (13 contracts). c. Buy 100 options (one contract) for $1,600, and Invest the remalning $19,200 in a money market fund paylng 4% in Interest over 6 months ( 8% per year). What is your rate of return for each alternatlve 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 portfollo (Bills +100 optlons)" answers to 2 declmal places.) The total value of your portfolio in slx months for each of the following stock prices is: The percentage return of your portfolio in slx months for each of the following stock prices is
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