A Speculator Can Choose Between Buying 100 Shares of a Stock

question 12

Multiple Choice

A speculator can choose between buying 100 shares of a stock for $40 per share and buying 1000 European call options on the stock with a strike price of $45 for $4 per option.For second alternative to give a better outcome at the option maturity,the stock price must be above

• A) $45
• B) $46
• C) $55
• D) $50