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1. You have 4 special put options (A-D) that can be exercised either now or 3 years from now, but not in-between, on a stock
1. You have 4 special put options (A-D) that can be exercised either now or 3 years from now, but not in-between, on a stock that pays no dividends. The continuously compounded risk-free rate is 7%, and you have the following information about European call options with three years to expiration with strikes that correspond with those of your put options: Option Strike Call Price A 50 16.50 B 60 10.50 70 5.75 D 80 2.25 If the current stock price is $40, which of the options should be exercised immediately? A. A only B. A and B C. B, C, and D D. All should be exercised immediately E. All should be exercised in 3 years
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