Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
![Suppose you have $21,000 to invest. You're considering Miller-Moore Equine Enterprises (MMEE), which is currently selling for $70 per
share. You also notice that a call option with a $70 strike price and six months to maturity is available. The premium is $3.5. MMEE
pays no dividends. What is your annualized return from these two investments if, in six months, MMEE is selling for $77 per share?
What about $66 per share?-
Note: A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a
percent rounded to 2 decimal places.
> Answer is complete but not entirely correct.
Annualized Return
Option
$77 per share
$66 per share
Stock
21.00
%
-11.09 %
300.00 %
-100.00 %](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F15a1018e-8a53-4537-bd5e-8c23be1f96a2%2F2a66f3de-d7dc-4bde-a33e-b3e9c94f87db%2Fcawnvll_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Suppose you have $21,000 to invest. You're considering Miller-Moore Equine Enterprises (MMEE), which is currently selling for $70 per
share. You also notice that a call option with a $70 strike price and six months to maturity is available. The premium is $3.5. MMEE
pays no dividends. What is your annualized return from these two investments if, in six months, MMEE is selling for $77 per share?
What about $66 per share?-
Note: A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a
percent rounded to 2 decimal places.
> Answer is complete but not entirely correct.
Annualized Return
Option
$77 per share
$66 per share
Stock
21.00
%
-11.09 %
300.00 %
-100.00 %
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