Today,you Are Buying a One-Year Call on Piper Sons Stock

Multiple Choice

Today,you are buying a one-year call on Piper Sons stock with a strike price of $27.50 per share and a one-year risk-free asset which pays 4 percent interest.The cost of the call is $1.40 per share and the amount invested in the risk-free asset is $26.57.How much total profit will you earn on these purchases if the stock has a market price of $29 one year from now?

A) $0.10
B) $0.85
C) $1.16
D) $1.20
E) $1.27