$77 per share $66 per share Answer is complete but not entirely correct. Annualized Return Option Stock 21.00 -11.09 % % 300.00 % -100.00 %

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Suppose you have $21,000 to invest. You're considering Miller-Moore Equine Enterprises (MMEE), which is currently selling for $70 per
share. You also notice that a call option with a $70 strike price and six months to maturity is available. The premium is $3.5. MMEE
pays no dividends. What is your annualized return from these two investments if, in six months, MMEE is selling for $77 per share?
What about $66 per share?-
Note: A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a
percent rounded to 2 decimal places.
> Answer is complete but not entirely correct.
Annualized Return
Option
$77 per share
$66 per share
Stock
21.00
%
-11.09 %
300.00 %
-100.00 %
Transcribed Image Text:Suppose you have $21,000 to invest. You're considering Miller-Moore Equine Enterprises (MMEE), which is currently selling for $70 per share. You also notice that a call option with a $70 strike price and six months to maturity is available. The premium is $3.5. MMEE pays no dividends. What is your annualized return from these two investments if, in six months, MMEE is selling for $77 per share? What about $66 per share?- Note: A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. > Answer is complete but not entirely correct. Annualized Return Option $77 per share $66 per share Stock 21.00 % -11.09 % 300.00 % -100.00 %
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