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Consider a stock priced at $31 with put and call options available at exercise prices of 30 and a time to expiration of six months.

Consider a stock priced at $31 with put and call options available at exercise prices of 30 and a time to expiration of six months. The calls are priced at $3.56 and the puts cost $1.15. There are no dividends on the stock and the options are European. What is the breakeven stock price at expiration for the writer of a covered call if the stock price at expiration is $27?

a.

$31.00

b.

$28.21

c.

$27.44

d.

$31.00

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