ESSEN.OF INVESTMENTS(LOOSE)W/CONNECT<BI>
ESSEN.OF INVESTMENTS(LOOSE)W/CONNECT<BI>
11th Edition
ISBN: 9781264800919
Author: Bodie
Publisher: MCG
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Chapter 15.2, Problem 1EQ

Plot the rate of return to the call-plus-bills strategy using a diagram like that in Figure 15 . 5 but now assuming the investor uses an in-the-money can option with a strike price of $ 8 0 . Assume the cans sell for $ 15 . The higher cost for these calls compared to the at-the-money calls will result in less money being placed in -bills because the investment budget is still $ 9 , 000 .

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