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An investor has two investment choices. First, he/she could buy 100 shares of stock for $50 per share. Second, he/she could buy 1000 European call
An investor has two investment choices. First, he/she could buy 100 shares of stock for $50 per share. Second, he/she could buy 1000 European call options on the stock with a strike price of $42 for $5 per option. For second choice to give a better outcome than the first choice at option maturity, the stock price must be above a certain level. How much is this level?
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