(Lower bound of call) You want to buy one American call option contract on ABC Computer, expiring...
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(Lower bound of call) You want to buy one American call option contract on ABC Computer, expiring in 6 months, with a strike price of $23. The current stock price is at $24.80.
a. Can the option price be lower than $0.30? Assume that the interest rate is 5%.
b. Assume that you can buy the call for $0.30 (which is less than the theoretical minimum). How can you exploit the mispricing to make a riskless gain?
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Related Book For 
Principles Of Finance Wtih Excel
ISBN: 9780190296384
3rd Edition
Authors: Simon Benninga, Tal Mofkadi
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