Consider that we have the June 130 IBM call and an investor wants to invest $16 000 of his investable funds through the cash and options markets. It is also given that the contract size is 200 and the...

Consider that we have the June 130 IBM call and an investor wants to invest $16 000 of his investable funds through the cash and options markets. It is also given that the contract size is 200 and the market borrowing rate is 10% p.a. a) Determine the profit that the fund can generate in the cash market; b) Calculate the profit that the fund can generate in the options market if the IBM stock turns out to be worth $120 on the expiration date given that leverage is limited to 50% in the cash market.