USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 56

Multiple Choice

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
Rick Thompson is considering the following alternatives for investing in Davis Industries, which is now selling for $44 per share:

-Refer to Exhibit 14.2. Assuming no commissions or taxes, what is the annualized percentage gain if the stock reaches $50 in four months and a call was purchased?

• A) 161.54 percent gain
• B) 53.85 percent gain
• C) 161.54 percent loss
• D) 11.11 percent gain
• E) 53.85 percent loss

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