The price of abc stock is currently 42 per share but in six, Ask an Expert

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The price of ABC stock is currently $42 per share, but in six months you expect it to rise to $50. ABC does not pay a dividend. You buy a six-month call on ABC, with a strike price of $45. The option cost $200. What holding period return do you expect on this call? Ignore transaction costs and taxes. Show work.

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Financial Management, Finance

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