You are intending to buy a European call option non-dividend paying stock. The stock is currently trading for $55. The strike price is set at $50. The option matures in 6 months and the risk free rate of interest is 12%. What is the minimum price you like to pay for buying the option? How can you make profit if the call is selling in the market for $5? 

Answer rating: 100% (QA)

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