The current price of a share of stock is $40 and 6-month European call options on the stock with an exercise price of $41 are currently selling for $4. An investor is trying to decide between buying 100 shares or buying 1,000 call options on the stock (10 contracts). Both strategies will involve investing $4,000.

a)Identify the profit/loss for both strategies at the end of 6 months as a function of the stock price ST.

b) Identify the stock price at which both strategies are equally profitable.