47 an investor with 2000 to invest feels that a stock

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An investor with $2,000 to invest feels that a stock price will increase over the next 2 months. The current stock price is $20 and the price of a 2-month call option with a strike of 22.50 is $1. What are the alternative strategies? 48
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Hedge funds are not subject to the same rules as mutual funds and cannot offer their securities publicly. Mutual funds must disclose investment policies, makes shares redeemable at any time, limit use of leverage take no short positions. 49
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Hedge funds are not subject to these constraints. Hedge funds use complex trading strategies are big users of derivatives for hedging, speculation and arbitrage 50
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  • Spring '12
  • D.S.G.Pollock
  • John C. Hull

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