28. Option values (S21-3) Table 21.4 lists some prices of options on common stocks (prices are quoted to the nearest dollar). The interest rate is 10% a year. Can you spot any mispricing?

What would you do to take advantage of it?

Stock Time to Exercise

(months) Exercise Price Share Price Put Price Call Price Drongo Corp. 6 $ 50 $80 $20 $52 Ragwort, Inc. 6 100 80 10 15 Wombat Corp. 3 40 50 7 18 Wombat Corp. 6 40 50 5 17 Wombat Corp. 6 50 50 8 10

⟩ TABLE 21.4 Prices of options on common stocks

(in dollars). See Problem 28.

CHALLENGE