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Annualized
Returns. Complete problem 18 in
Chapter 3 (shown below) and submit to the instructor. Show your work to find
the annualized return for each of the listed share prices. Write a 100 word
analysis of the process to calculate these annualized returns.
Suppose you have
$28,000 to invest. You’re considering Miller-Moore Equine Enterprises (MMEE),
which is currently selling for $40 per share. You also notice that a call
option with a $40 strike price and six months to maturity is available. The
premium is $4.00. MMEE pays no dividends. What is your annualized return from
these two investments if, in six months, MMEE is selling for $48 per share?
What about $36 per share?
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