An investor purchases a long call at a price of $2.50.The expiration price is $35.00.If the current stock price is $35.10,what is the break even point for the investor?

Question

Quizplus · Accepted Answer

For a long call, the break even point can be calculated using the following formula: 
Break even point = Strike price + Premium paid

In this case, the strike price (or exercise price) is not given. So, we assume that it is equal to the expiration price of $35.

Premium paid = $2.50

Putting these values in the formula, we get: 
Break even point = $35 + $2.50 = $37.50

Therefore, the correct choice is C) $37.50.

An Investor Purchases a Long Call at a Price of $2.50.The