Three Finance majors have differing opinions about TSLA stock, which currently trades at $700/share. Student...
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Finance
Three Finance majors have differing opinions about TSLA stock, which currently trades at $700/share. Student 1 is very bullish (believes it will go way up) and decides to purchase shares of TSLA on margin. Student 2 feels the opposite and uses margin to sell short the same number of shares of TSLA. Student 3 isnt sure but feels TSLA will be volatile over the next year and buys an ATM straddle. One year from today, TSLA trades at exactly $700/share. Which student(s), if any, will see a negative ROI on their investment strategy, under normal assumptions of transaction costs.
A-Student 2
B- All 3 students
C- None of the Students
D- Students 1 and 2
E- Students 2 and 3
F-Student 3
G- Student 1
H- Students 1 and 3
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