What is the breakeven stock price for this call buyer

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Reference no: EM131606428

1. Suppose firm ABC has access to fixed rate 8%, and floating rate LIBOR + .5%, while XYZ had access to fixed rate 10% and floating rate LIBOR + 1.5%. For these two firms:

Only ABC has a comparative advantage in floating rates

Only XYZ has a comparative advantage in the floating rate

ABC has a comparative advantage in fixed while XYZ has a comparative advantage in floating rates

ABC has a comparative advantage in both fixed and floating rates

2. Consider a call option selling for $5 for which the exercise price is $40. What is the breakeven stock price for this call buyer with regard to profit at expiration?

$30

$35

$40

$45

$50

Reference no: EM131606428

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