Expiration of the call options the price of atlantic rises

Assignment Help Financial Management

Reference no: EM131509889

A company called Atlantic exists and has a current stock price of $25 per share. Suppose you have $1,000 to invest and consider these two possibilities; (1) use all $1,000 to buy shares in Atlantic long, or (2) use all $1,000 to buy call options on Atlantic with a strike price of $25 and a premium of $5. Which of the following is TRUE if just prior to expiration of the call options the price of Atlantic rises to $30? Assume that with possibility (1) you sell all your shares at $30.

a. (1) provides a return of 5% while (2) provides a return of -100%

b. (1) provides a return of 20% while (2) provides a return of 50%

c. (1) provides a return of 20% while (2) provides a return of -100%

d. (1) provides a return of 20% while (2) provides a return of 0%

e. (1) provides a return of 5% while (2) provides a return of 50%

Reference no: EM131509889

Questions Cloud

Localized inflammatory response : Which of the clinical manifestations given are associated with a localized inflammatory response?

Neurons and neurological diseases : In this graded discussion, you will apply what you learned in the neuron simulation activity by exploring the role of neurons in some common diseases.

Define virtue ethics and rule utilitarian ethics : Read the article below. Keep in mind that the article is not written from a neutral perspective, so you may need to filter out the negative tone of the article.

Review the information regarding hr certifications : Go to the Society for Human Resource Management's (SHRM) Website and review the information regarding HR certifications

Expiration of the call options the price of atlantic rises : Which of the following is TRUE if just prior to expiration of the call options the price of Atlantic rises to $30?

Musculoskeletal-respiratory-digestive system : Introduce yourself to the class by stating three facts about the musculoskeletal, respiratory, or digestive system.

Develop a customer service training implementation plan : Develop a customer service training implementation plan and determine the method of training. Justify why you selected the training method that you did

How would locke have addressed or solved the problem : Consider these three problems. In writing a paper about all three of them individually, identify the consequences of the actions taken, and then determine.

Calculate copy department costs allocated to sales : which does almost all of the photocopying for the sales department and the administrative department, calculate the copy department costs allocated to sales.

User Account

All Pages