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Question
Suppose you believe that Basso Inc.'s stock price is going to increase from its current level of $22.50 sometime during the next 5 months. For $3.10 you can buy a 5-month call option giving you the right to buy 1 share at a price of $25 per share. If you buy this option for $3.10 and Basso's stock price actually rises to $45, what would your pre-tax net profit be?
a. -$3.10
b. $16.90
c. $17.75
d. $22.50
e. $25.60
Answer
This answer is hidden. It contains 1 characters.
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