Question: Please answer fully and accurately for a good review Problem 20-6 Suppose you think Apple stock is going to appreclate substantially In value In the

 Please answer fully and accurately for a good review Problem 20-6

Please answer fully and accurately for a good review

Problem 20-6 Suppose you think Apple stock is going to appreclate substantially In value In the next year. Say the stock's current price, S. Is $125. and a call option expiring In one year has an exercise price, X, of $125 and is selling at a price, C, of $10. With $11,000 to Invest, you are considering three alternatives. a. Invest all $11,000 In the stock, buying 88 shares. b. Invest all $11,000 In 1,100 options (11 contracts). c. Buy 100 options (one contact) for $1,000, and invest the remaining $10,000 in a money market fund paying 4% in Interest over 6 months (5% per year). What Is your rate of return for each altenatlve for the following four stock prices In 6 months? (Leave no cells blank be certain to enter "O" 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.) The total value of your portfollo In slx months for each of the following stock prices Is: Price of Stock 6 Months from Now 1255 1055 135 Stock Price All stocks (88 shares) All options (1.100 options) 145 Bills100 options The percentage return of your portfolio In six months for each of the following stock prices Is: Price of Stock 6 Months from Now 105 145 Stock Price All stocks (88 shares) All options (1.100 options) Bills100 options 125 135

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