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49. Company ABC plans to buy 500 widgets in 6 months. Widgets are currently selling for $60 per widget. The company buys 500 call

49. Company ABC plans to buy 500 widgets in 6 months. Widgets are currently selling for $60 per widget. The company buys 500 call options with a strike price K to insure against widget prices higher than K. Call option prices are as follows: Strike Price Call Premium 40 6.60 50 4.80 60 3.59 70 2.74 80 2.12 The risk-free rate is 6% convertible semiannually. The spot price in 6. months is $75. The profit received from the call options is $1,088.90. Determine K. A. 40 B. 50 C. 60 D. 70 E. 80

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