An Investor Is Considering Buying 500 Shares of ABC Company

Multiple Choice

An investor is considering buying 500 shares of ABC Company at $32 per share. Analysts agreethat the firm's stock price may increase to $45 per share in the next 4 months. As an alternative, theinvestor could purchase a 120-day call option at a striking price of $30 for $5,000. At what stock price would the investor break even?

A) $35
B) $45
C) $40
D) $42