Looking for some help understanding this concept. Thank you.

P17-21 Call option Carol Krebs is considering buying 100 shares of Sooner Products, Inc.,

at $62 per share. Because she has read that the firm will probably soon receive certain

large orders from abroad, she expects the price of Sooner to increase to $70 per

share. As an alternative, Carol is considering purchase of a call option for 100

shares of Sooner at a strike price of $60. The 90-day option will cost $600. Ignore

any brokerage fees or dividends.

a. What will Carol's profit be on the stock transaction if its price does rise to $70

and she sells?

b. How much will Carol earn on the option transaction if the underlying stock price

rises to $70?

c. How high must the stock price rise for Carol to break even on the option transaction?

d. Compare, contrast, and discuss the relative profit and risk associated with the

stock and the option transactions.