Ted Westfall was considering the purchase of 100 shares of Stopgap Corporation common stock selling at $32.40 per share on the last day in October. As an alternative, Len Griffen, Teds neighbor, suggested that Ted consider a Stopgap option instead. Together they examined the following information that was obtained from their broker.

Exercise

Price Calls Puts

30 6 2

35 3.50 4.75

What are Teds profits and rates of return if he makes the following purchases and subsequently closes his position at expiration given the stock prices as indicated below?

a. A call with an exercise price of 30. The stock ends up at 41.90.

b. A call with an exercise price of 35. The stock ends up at 33.

c. A put with an exercise price of 30. The stock ends up at 37.

d. A put with an exercise price of 35. The stock ends up at 29.