The Price of ABC Stock Is Currently $42 Per Share

question 13

Multiple Choice

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.

• A) 150%
• B) 200%
• C) 250%
• D) 300%

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