Consider an American put option on XAL stock with a strike price of $55 and one year

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Consider an American put option on XAL stock with a strike price of $55 and one year to expiration.

Assume XAL pays no dividends, XAL is currently trading for $10 per share, and the one-year interest rate is 10%. If it is optimal to exercise this option early:

a. What is the price of a one-year American put option on XAL stock with a strike price of

$60 per share?

b. What is the maximum price of a one-year American call option on XAL stock with a strike price of $55 per share?

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Corporate Finance

ISBN: 9780137845071

6th Edition

Authors: Jonathan Berk, Peter DeMarzo

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Question Posted: Jun 12, 2024 01:15 AM

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Consider an American put option on XAL stock with a strike price of $55 and one year

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Corporate Finance

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