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What is the net gain or loss to depaul after accounting

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Reference no: EM132915363

Problem - DePaul Insurance Company purchased a call option on a stock index futures contract. The option premium is quoted as $6. The exercise price is 1,430. Assume the index on the futures contract reaches 1,440. Should DePaul exercise the call option or should it let the option expire? What is the net gain or loss to DePaul after accounting for the premium paid for the option (assume the value is measured as $250 times the index)?

Reference no: EM132915363

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