You pay $4.4 for a call option on Luther Industries that expires in three months with a
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Question:
You pay $4.4 for a call option on Luther Industries that expires in three months with a strike price of $40.8. Three months later at expiration, Luther Industries is trading at $42.6 per share.
a) What is the option premium?
b) If you choose to exercise the option, what will your payoff be?
c) What is your profit per share in this transaction?
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