What is the return that an investor would have earned

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Suppose an investor bought a call option for $2.39 on a single share of Beatnik Designs Co. with a strike price of $35.00 when the firm's stock traded at $36.24. The call option had one year until expiration. One year later, the stock price had increased to $38.22. The stock price had therefore increases by 5.46%, and an investor who bought the stock and held it for a year would have earned 5.46%. What return did this investor earn by buying the call option?

Suppose the stock price had fallen to $34.23. Indicate the return that a stock investor would have eared by holding Beatnik Design's Co.'s stock. What is the return that an investor would have earned if she had bought a call option on Beatnik Design Co.'s stock?

Reference no: EM131070483

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