Which is the better investment after five years

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Reference no: EM131931893

1. Assume that you purchase a call option costing $10/share which would allow you to purchase 100 shares of stock at a strike price of $90. If, at the exercise date, the stock was trading at $115, would you exercise the option? What would be your return? What about if the stock was trading at $95 on the exercise date?

2. Assume that Fund A charges a front-end load of 6%, an expense ratio of 0.4% and no 12b-1 fees. Assume that Fund B charges no front-end load, 12b-1 fees of 0.5% an expense ratio of 1% and back-end fees of 2%. If both funds’ portfolios have an average return of 12%, which is the better investment after 5 years given an initial investment of $5,000?

Reference no: EM131931893

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