Problem:
An investor purchases a call option with an exercise price of $55 for $2.60. The same investor sells a call on the same security with an exercise price of $60 for $1.40. At expiration, 3 months later, the stock price is $56.75.
Required:
Question: All other things being equal and given an annual interest rate of 4.0%, what is the net profit or loss to the investor?
Note: Show all workings.