Draw the payoff and profit graphs for the call option, Financial Management

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Draw the payoff and profit graphs for the call option

Consider a call option on the S&R index with 6 months to expiration and a strike price of $1000. Suppose that the effective rate compounded semiannually is 2% and the premium for this call is $93.81. (a) Draw the payoff and profit graphs for the call option holder. (b) If the S&R index price at expiration is $1100, will the owner exercise this option? What is the profit? (c) If the S&R index price at expiration is $900, will the owner exercise this option? What is the profit?

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Financial Management: Draw the payoff and profit graphs for the call option

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