You like the near term prospect of ABC Company and decide to buy the stock call options.The

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Question:

You like the near term prospect of ABC Company and decide to buy the stock call options.The current stock price is $53.You will buy 10 contracts with $54 strike price and it expires in nine months.The call premium for each share is $1.

6 months later, the stock price increases to $56,

Questions:

a)What's the breakeven stock price for the call option?

b)What's the option intrinsic value?

c)What's the option's payoff?

D)Draw an option pay-off diagram;

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Auditing An International Approach

ISBN: 978-0071051415

6th edition

Authors: Wally J. Smieliauskas, Kathryn Bewley

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Posted Date: Mar 04, 2024 06:00 AM

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You like the near term prospect of ABC Company and decide to buy the stock call options.The

Question:

Expert Answer:

a The breakeven stock price for the call option can be calculated by adding the strike price and the ... View the full answer

Auditing An International Approach

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