INV.PORT HW2 /Q2

PLEASE ANSWER STEP BY STEP WITH EXPLINATION

Refer to the stock options on Microsoft in the figure 210 . Suppose you buy a November expiration call option on 200 shares with the excise price of $135. Requlred: a-1. If the stock price at option expiration is $142, will you exercise your call? Yes No a-2. What is the net profilioss on your position? (input the amount as a positive value.) a-3. What is the rate of return on your position? (Negative value should be indicated by a minus sign, Round your answer to 2 decimal places.) b-1. Would you exercise the call if you had bought the November call with the exercise price $130 ? Yes No b-2. What is the net profitloss on your position? (Input the amount as a positive value.) b-3. What is the rote of return on your postion? (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.) b-3. What is the rate of retum on your position? (Negative value should be indicated by a minus sign, Round your answer to 2 decimal places.) e.1. What if you had bought the November put with exercise price $135 instead? Would you exorcse the put at a stock price of $135 ? Yes wo c.2. What is the rate of return on you posnion? (Wegative value theuld be indicated by a minus sign.) FIGURE 2.10 Stock options on Microsoft, September 4, 2019 Note: Microsoft stock price on this day was $137.49. Source: Compiled from data downloaded from Yahoo! Finance