Suppose you think AppX stock is going to appreciate substantially in value in the next year. Say the stock's current price, So, is $80,and a call option expiring in one year has an exercise price, X, of $80 and is selling at a price, Co, of $24. With $24,000 to invest, youare considering three alternatives.a. Invest all $24,000 in the stock, buying 300 shares.b. Invest all $24,000 in 1,000 options (24 contracts).c. Buy 100 options (one contract) for $2,400, and invest the remaining $21,600 in a money market fund paying 6% annual interest.What is your rate of return for each alternative for the following four stock prices in one year?Complete this question by entering your answers in the tabs below.In terms ofdollar returnsIn terms ofrate of returnWhat is your rate of return for each alternative for the following four stock prices in one year?The total value of your portfolio in one year for each of the following stock prices is:Note: 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.-Stock Pricea. All stocks (300 shares)b. All options (1,000 options)c. Bills + 100 optionsPrice of Stock one year from Now$60$80 $90$100Show less▲ Suppose you think AppX stock is going to appreciate substantially in value in the next year. Say the stock's current price, So, is $80,and a call option expiring in one year has an exercise price, X, of $80 and is selling at a price, Co, of $24. With $24,000 to invest, youare considering three alternatives.a. Invest all $24,000 in the stock, buying 300 shares.b. Invest all $24,000 in 1,000 options (24 contracts).c. Buy 100 options (one contract) for $2,400, and invest the remaining $21,600 in a money market fund paying 6% annual interest.What is your rate of return for each alternative for the following four stock prices in one year?Complete this question by entering your answers in the tabs below.In terms ofdollar returnsIn terms ofrate of returnWhat is your rate of return for each alternative for the following four stock prices in one year?The percentage return of your portfolio in one year for each of the following stock prices is:Note: 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.Price of Stock one year from NowStock Price60$80$90 $100a. All stocks (300 shares)%%%%b. All options (1,000 options)%%%%c. Bills +100 options%%%%Show less▲

Stock Price: This is the current price of the stock, denoted as S0, which is $80 in this…

Suppose you think AppX stock is going to appreciate substantially in value in the next year. Say the stock's current price, So, is $80, and a call option expiring in one year has an exercise price, X, of $80 and is selling at a price, Co, of $24. With $24,000 to invest, you are considering three alternatives. a. Invest all $24,000 in the stock, buying 300 shares. b. Invest all $24,000 in 1,000 options (24 contracts). c. Buy 100 options (one contract) for $2,400, and invest the remaining $21,600 in a money market fund paying 6% annual interest. What is your rate of return for each alternative for the following four stock prices in one year?

Suppose you think AppX stock is going to appreciate substantially in value in the next year. Say the stock's current price, So, is $80, and a call option expiring in one year has an exercise price, X, of $80 and is selling at a price, Co, of $24. With $24,000 to invest, you are considering three alternatives. a. Invest all $24,000 in the stock, buying 300 shares. b. Invest all $24,000 in 1,000 options (24 contracts). c. Buy 100 options (one contract) for $2,400, and invest the remaining $21,600 in a money market fund paying 6% annual interest. What is your rate of return for each alternative for the following four stock prices in one year?

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter12: Investing In Stocks And Bonds

Section: Chapter Questions

Problem 1FPE: What makes for a good investment? Use the approximate yield formula or a financial calculator to...

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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 $50, and a call option expiring in one year has an exercise price, X, of $50 and is selling at a price, Co, of $9. With $18,900 to invest, you are considering three alternatives. a. Invest all $18,900 in the stock, buying 378 shares. b. Invest all $18,900 in 2,100 options (9 contracts). c. Buy 100 options (one contract) for $900, and invest the remaining $18,000 in a money market fund paying 6% annual interest. What is your rate of return for each alternative for the following four stock prices in one year? Complete this question by entering your answers in the tabs below. In terms of In terms of dollar returns rate of return What is your rate of return for each alternative for the following four stock prices in one year? The total value of your portfolio in one year for each of the following stock prices is: Note: Leave no cells blank - be certain to enter…
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