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Janet Lee Is Considering Purchasing Shares in DM Designs

question 149

Essay

Janet Lee is considering purchasing shares in DM Designs. The share price is currently $64. Alternatively, Janet can buy an out of the money call option with a striking price of $65, that is currently priced at $2.25. Janet expects the stock price to rise to $68. What is the difference between the stock's return on investment and the option's return on investment?

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Definitions:

Centering

The act of bringing focus to a central point or concern, often used in meditative practices to achieve calmness and balance.

Focusing

A technique of paying direct, particular attention to a single task or thought, often used to increase efficiency or mindfulness.

Opening

The act or opportunity of making something accessible, available, or starting a new venture or phase.

Theoretical Propositions

Statements or concepts proposed within a theory that can be tested by research or observations.

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