Explain annualized returns problem

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Explain Annualized Returns Problem

Complete problem 18 in Chapter 3 (shown below), and submit your work to the instructor. Show your work to find the annualized return for each of the listed share prices. Write a one-page analysis, according to APA style guidelines, of the process to calculate these annualized returns.

Suppose you have $28,000 to invest. You are considering Miller-Moore Equine Enterprises (MMEE), which is currently selling for $40 per share. You also notice that a call option with a $40 strike price and six months to maturity is available. The premium is $4.00, and MMEE pays no dividends. What is your annualized return from these two investments if, in six months, MMEE is selling for $48 per share? What about $36 per share?

Reference no: EM1356126

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