Suppose that you own an American put option on Buffelhead stock (see Problem 12) with an exercise
Question:
Suppose that you own an American put option on Buffelhead stock (see Problem 12) with an exercise price of $220.
a. Would you ever want to exercise the put early?
b. Calculate the value of the put.
c. Now compare the value with that of an equivalent European put option.
Visit us at www.mhhe.com/bma Chapter 21 Valuing Options 547 AppendixLO1
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