BUS 405 Week 1

BUS405 Grading Rubric

Assignment: Annualized Returns

Instructions

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?