Question

An investor buys a call at a price of $4.70 with an exercise price of $42. At what stock price will the investor break even on the purchase of the call? (Round your answer to 2 decimal places.)

Answer 1

$46.70

Step-by-step explanation:

At a break-even point, the investor has no profit or no loss during that particular period.

The computation of the stock price is shown below:

= Exercise price + price buys at call

= $42 + $4.70

= $46.70

Simply we added the exercise price and the price buys at call so that the correct stock price could find out.