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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?

Reference no: EM131318429

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