Question
You expect FinanceRocks Corp.s stock prices to increase above the current stock price level of $32. In order to take advantage of this expectation, you
You expect FinanceRocks Corp.s stock prices to increase above the current stock price level of $32. In order to take advantage of this expectation, you purchase a call option on FinanceRocks Corp.s stock, with an exercise price of $35 and a premium of $4 per share. Just before the expiration, stock price rises to $36. Should you exercise the call option? Based on your decision, what will the total payoff per share be?
Group of answer choices
Exercise; Total Payoff per share is $7 loss
Exercise; Total Payoff per share is $3 loss
Do not exercise; Total Payoff per share is $7 loss.
Do not exercise; Total Payoff per share is $4 loss.
Do not exercise; Total Payoff per share is $3 loss.
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