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Suppose you think FedEx stock is going to appreciate substantially in value in the next 6 months. Say the stock's current price, So, is $120,

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Suppose you think FedEx stock is going to appreciate substantially in value in the next 6 months. Say the stock's current price, So, is $120, and the call option expiring in 6 months has an exercise price, X, of $120 and is selling at a price, C, of $5. With $12,000 to invest, you are considering three alternatives. a. Invest all $12,000 in the stock, buying 100 shares b. Invest all $12,000 in 2,400 options (24 contracts) C. Buy 100 options (one contract) for $500, and invest the remaining $11,500 in a money market fund paying 5% in interest over 6 months (10% per year) What is your rate of return for each alternative for the following four stock prices 6 months from now? (Leave no cells blank - be certain to enter "O" wherever required. Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places. Omit the "S" and "%" signs in your response.) The percentage return of your portfolio in stx months for each of the following stock prices is: Price of Stock 6 Months from Now $120 Stock Price All stocks (100 shares) All options (2,400 options) Bills 100 options $100 30 $140 96

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