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- A call option on Illinois stock specifies an exercise price of $38. Today's price for the stock is $40. The premium on the call option is $5. Assume that the option will not be exercised until the maturity date, if at all. Complete the following table.
| Assumed stock price at the time the call option is about to expire | Net profit or loss per share to be earned by the writer (seller) of the call option |
| $37 | |
| $39 | |
| $41 | |
| $43 | |
| $45 | |
| $49 |
- A call option on Michigan stock specifies an exercise price of $55. Today's price for the stock is $54 per share. The premium on the call option is $3. Assume that the option will not be exercised until maturity, if at all. Complete the following table for a speculator who purchases the call option.
| Assumed stock price at the time the call option is about to expire | Net profit or loss per share to be earned by the speculator |
| $50 | |
| $52 | |
| $54 | |
| $56 | |
| $58 | |
| $60 | |
| $62 |
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