22.12 Suppose you observe the following market prices: American call (Strike $50) $8 Stock $60 a....

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22.12 Suppose you observe the following market prices:

American call (Strike $50) $8 Stock $60

a. What should you do?

b. What is your profit or loss?

c. What do opportunities such as this imply about the lower bound on the price of American calls?

d. What is the upper bound on the price of American calls? Explain.

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Corporate Finance

ISBN: 9780071229036

6th International Edition

Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe

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Question Posted: Jul 26, 2024 03:01 AM

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22.12 Suppose you observe the following market prices: American call (Strike $50) $8 Stock $60 a....

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Corporate Finance

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