So far, things have gone well with Dr. Washington. Before you wrap up your meetings and he begins investing, you decide to spend a little time sharing information with him about using derivatives to manage risk and enhance returns in his stock portfolio.

So far, things have gone well with Dr. Washington. Before you wrap up your meetings and he begins investing, you decide to spend a little time sharing information with him about using derivatives to manage risk and enhance returns in his stock portfolio.

You decide the best way to illustrate this is via a call option that he can use on a stock that might have some upside potential. If the stock does not reach the potential, the option minimizes the risk. The stock is AXQ Enterprises—a high-tech firm that did well during the Internet boom but declined when the boom turned into a bust.

If the company’s new portal software is adopted by a large number of consumers over the next few months, you believe the stock can go much higher. The 6-month options are priced at US$1, the strike price is US$22, and the current price for AXQ stock is US$20.

Put together a PowerPoint presentation with a table or graph included that illustrates what advice you would give Dr. Washington on the options if the price of the stock was US$18, US$21, US$24, or US$28 at the end of 6 months.

Assignment Guidelines:

• Create a PowerPoint presentation for Dr. Washington that includes the  following: 

Slide 1 – Title Slide (Name, course name, and unit number)Slide 2 – Your table or graph that contains the stock  option data and the profit/loss depending on the stock prices of US$18, US$21,  US$24, or US$28 at the end of the 6-month period. Slide 3 – Your recommendations on whether or not to  exercise the option based on the four hypothetical stock prices from slide 2.  Explain the reasoning behind your recommendations.Slide 4 – Answer the following question: What happens if the stock price hits US$23? US$23.01?Slide 5 – Answer the following question: What purpose could adding a technology company into a stock portfolio serve?

• Please be sure that your PowerPoint presentation adheres to the general  presentation format above.

Your submitted assignment (
125 points) must include  the following:

A 5-7 slide PowerPoint presentation that includes a title page, your stock option information table or graph, your stock option recommendations, and your answers to the questions listed in the Assignment Guidelines