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The curent price of a stock is $ 1 0 5 , and three - month European call options with a strike price $ 1
The curent price of a stock is $ and threemonth European call options with a strike price $ currently sell for $ An investor who feels that the price of the stock will increase is trying to decide between buying shares and buying call options. Both strategies involve an investment of $ If the share price increases to $ the gain to the investor if he bought call options will be $ If the share price increases to $ the gain to the investor if he bought shares will be $ It is therefore advisable for the investor to but to benefit from an increase in share price. For both the strategies to be equally profitable the stock price should increase to $
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