Waiting for answer This question has not been answered yet. You can hire a professional tutor to get the answer.
QUESTION
Suppose you think MSFT stock is going to appreciate substantially in the next yr.
Suppose you think MSFT stock is going to appreciate substantially in the next yr. The stock’s current price is $100and call options expiring in 1 yr has an exercise price of $100 and is selling for $5. With $1,000 to invest you are considering 2 options:
i) Invest$1K in stock and
ii) Invest$1K in options
What are profits and HPR of i) and ii) if stock is worth $90 in 1 yr?
– What are profits and HPR of i) and ii) if stock is worth $180 in 1 yr?
