A One-Year Call Option on a Stock with a Strike

question 1

Multiple Choice

A one-year call option on a stock with a strike price of $30 costs $3; a one-year put option on the stock with a strike price of $30 costs $4.Suppose that a trader buys two call options and one put option.The breakeven stock price below which the trader makes a profit is

• A) $25
• B) $28
• C) $26
• D) $20

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Definitions:

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