In Example 15.2, if the stock price is $40 just before the option expires, should you exercise
Question:
In Example 15.2, if the stock price is $40 just before the option expires, should you exercise the option? If you exercise the option, what is the percentage return on your investment? If you don’t exercise the option, what is the percentage return on your investment?
Example 15.2
Suppose that you bought one call option contract for $200. The strike price is $50. If the stock price is $60 just before the option expires, should you exercise the option? If you exercise the option, what is the percentage return on your investment?
If you don’t exercise the option, what is the percentage return on your investment?
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Step by Step Answer:
If the stock price is 40 you shouldnt exercise because by exercis...View the full answer
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Akash Goel
I am in the teaching field since 2008 when i was enrolled myself in chartered accountants course
Since then i have an experience of teaching of class XI, XII, BCOM, MCOM, MBA, CA CPT.
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Related Book For 
Fundamentals Of Investments Valuation And Management
ISBN: 9781266824012
10th Edition
Authors: Bradford Jordan, Thomas Miller, Steve Dolvin
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