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Suppose you believe that Johnson Company's stock price is going to increase from its current level...

Suppose you believe that Johnson Company's stock price is going to increase from its current level of $22.50 sometime during the next 5 months. For $400 you can buy a 5-month call option giving you the right to buy 100 shares at a price of $25 per share. If you buy this option for $400 and Johnson's stock price actually rises to $36, would you exercise your call option? And what would be your pre-tax net profit or loss from holding this option?

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