Calculate your net profit on the option

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You have purchased a call option (100 contracts) on Mercer Corporation common stock. The option has an exercise price of $20.00 and Mercer’s stock currently trades at $20.00. The call premium (price) is $2 per contract. (a) Calculate your net profit on the option if Mercer Corporation’s stock price rises to $23.50 and you exercise the option. (b) Calculate your net profit on the option if Mercer Corporation’s stock price does not change over the life of the option.

Reference no: EM131057807

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