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The price of ABC stock is currently $42 per share, but in six months, you expect it to rise to $50. ABC does not pay a dividend. You buy a six-month call on ABC, with a strike price of $45. The option cost $200 What holding period return do you expect on this call? Ignore transaction costs and taxes. OA. 300% B. 200% OC. 150% OD. 250% CHOO

The price of ABC stock is currently $42 per share, but in six months, you expect it to rise to $50. ABC does not pay a dividend. You buy a six-month call on ABC, with a strike price of $45. The option cost $200 What holding period return do you expect on this call? Ignore transaction costs and taxes. OA. 300% B. 200% OC. 150% OD. 250% CHOO

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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The price of ABC stock is currently $42 per share, but in six months, you expect it to rise to $50. ABC does not pay a dividend. You buy a six-month call on ABC, with a strike price of $45. The option cost $200 What holding period return do you expect on this call? Ignore transaction costs and taxes. OA. 300% B. 200% OC. 150% OD. 250% COOO
Transcribed Image Text:The price of ABC stock is currently $42 per share, but in six months, you expect it to rise to $50. ABC does not pay a dividend. You buy a six-month call on ABC, with a strike price of $45. The option cost $200 What holding period return do you expect on this call? Ignore transaction costs and taxes. OA. 300% B. 200% OC. 150% OD. 250% COOO
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