Question: You have purchased a call option contract on J & K common stock. The option has an exercise price of $27 and J & K's stock currently trades at $28. The option premium is quoted at $2.

a. Calculate your net profit on the option contract if J & K's stock price rises to $32 and you exercise the option.

b. Calculate your net profit on the option contract if J &KJ's stock price falls to $28.00 and you exercise the option.

c If the stock price is $28.00, what would be the gain or loss if

you exercise or not exercise the option.

d. . Based on your answers above would it be more profitable

to exercise the option or not exercise the option?