3. Using arbitrage arguments explain why the price of an American call option on a stock...
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3. Using arbitrage arguments explain why the price of an American call option on a stock paying no dividends should be the same as the price of a corresponding European call. Why American calls on a nondividend paying stock should not be exercised early. 3. Using arbitrage arguments explain why the price of an American call option on a stock paying no dividends should be the same as the price of a corresponding European call. Why American calls on a nondividend paying stock should not be exercised early.
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Why American and European Calls on a NonDividend Paying Stock Have the Same Price Arbitrage Argument Consider an American call option and a European call option with the same strike price and expirati... View the full answer
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