Question: Consider a stock with current price S 0 = 2 9 per share. A european call option on this stock that matures in T =

Consider a stock with current price
S0=29 per share. A european call option on this
stock that matures in
T =3 months with strike
K =30 costs
PC =2.9 per share. You
are considering two ways to invest 58. Plan A is to buy 58
/29=2 shares of the stock
and sell them in 3 months. Plan B is to buy 58
/2.9=20 call options on the stock. If
ST denotes the stock price per share in 3 months, plan B has a higher payoff (a) for any
ST
>
0(b) if
ST
<29(c) if 29< ST
<30
(d) if
ST
>30(e) if ST >33.33

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