(Solved): Morgan believes the US stock market is undervalued given the current economic status and interest ra ...

Morgan believes the US stock market is undervalued given the current economic status and interest rate direction, she believes that Disney stock is headed for a substantial increase. However, Morgan has limited cash

to invest as she is waiting on a Certificate of Deposit to mature which will "free" up $70,000 in 6 months. Morgan wants to invest as much of the

as possible in a 6-month option on Disney with a strike price

above the current level while keeping in mind that she wants to own the stock at the end of the option period as she expects continued price increases. a. Disney is currently trading at

. b. June 25, 2025 Disney call option prices (selected) are: A) What would be the strike price for Morgan's options? B) How many contracts could Morgan purchase to meet all her criteria? C) What would be the total premium Morgan would invest? D) Are these options OTM, ATM, or ITM? E) What is the intrinsic value of the options? F) What is the time value of the options? G) Disney closes at

on September

. How much will Morgan have to invest to exercise the option? H) If Morgan had invested the

in Disney instead of buying the options, how much (in percentage) would she have made on the initial investment if Disney closed at

? I) How much did Morgan make (in percentage) by purchasing the options?