Exhibit 14 2 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM Rick Thompson is considering the following alternatives for investing in Davis Industries, which is now selling for $44 per share (1) Buy 500 shares (2) Buy six month call options with an exercise price of 45 for $3 25 premium Refer to Exhibit 14 2 Assuming no commissions or taxes, what is the annualized percentage gain if the stock is at $30 in four months and the stock was purchased a 95 45 percent loss b 9 54 percent gain c 9 54 percent loss d 95 45 percent gain e 0 9545 percent gain

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Question: Exhibit 14.2 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM Rick Thompson is considering the following alternatives for investing in Davis Industries, which is now

Exhibit 14.2 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM Rick Thompson is considering the following alternatives for investing in Davis Industries, which is now selling for $44 per share:

(1)	Buy 500 shares
(2)	Buy six-month call options with an exercise price of 45 for $3.25 premium.

Refer to Exhibit 14.2. Assuming no commissions or taxes, what is the annualized percentage gain if the stock is at $30 in four months and the stock was purchased?

a. 95.45 percent loss

b. 9.54 percent gain

c. 9.54 percent loss

d. 95.45 percent gain

e. 0.9545 percent gain

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