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warrenrulez warrenrulez
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A year ago
Suppose you believe that Smithson Inc.’s stock price is going to increase from its current level of $50 sometime during the next 5 months. For $410.25 you can buy a 5-month call option giving you the right to buy 100 shares at a price of $55 per share. If you buy this option for $410.25 and Smithson’s stock price actually drops to $45, what would your pre-tax net profit be?


▸

–$410.25



▸

–$1,410.25



▸

$1,410.25



▸

$1,862.95

Textbook 
Financial Management: Theory and Practice

Financial Management: Theory and Practice


Edition: 4th
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dhk72dhk72
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A year ago
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