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A company called TI has a current stock price of $5 per share. Suppose you have $100 to invest and consider these two possibilities; (1) use all $100 to buy shares in TI long at $5 per share, or (2) use all $100 to buy call options on TI with a strike price of $5 and a premium of $0.50. Which of the following is TRUE if just prior to expiration of the call options the price of TI is $5.50? Assume that with possibility (1) you sell all your shares at $5.50.
A. (1) provides a return of 0% while (2) provides a return of -100%
B. (1) provides a return of 0% while (2) provides a return of 0%
C. (1) provides a return of 10% while (2) provides a return of -100%
D. (1) provides a return of 10% while (2) provides a return of 0%
E. (1) provides a return of 10% while (2) provides a return of 10%
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