please show work for each problem for business calculator. ex. rate, N, PMT,PV,F

Question

please show work for each problem for business calculator. ex. rate, N, PMT,PV,FV

7 Is is January 1 and Bobitronics Inc. (BOB) stock is currently trading at $99.91. There is a May call option on BOB's stock with a strike price of 110. The option is currently trading at $3.10. Assume that the stock increases in value to $115.14 shortly before expiration. Calculate the percentage rate of return under the following 2 scenarios: a) You buy the stock today at $99.91 and then sell it at $115.14, and b) you buy the May 110 call contract at $3.10, exercise the option, and then sell the stock for $115.14. Assume that you can exercise and sell the stock simulataneously with no transactions costs.

Explanation / Answer

(a) If We Buy the shares Purchase Price of Share 99.91 Selling price 115.14 Profit 15.23 %Rate of Return (15.23/99.91) 15.2437% for Five Month Annual Return=.152437/5*12 36.5849% Anually (b) If we Buy option Option Price             3.10 Strike Price         110.00 Selling price         115.14 Profit             5.14 %Rate of Return (5.14/3.10) 165.8065% for Five Month Annual Return=.1658065/5*12 397.9355% Anually

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