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1st) The current price of stock X is $80. The annually compounded risk-free rate is 5%. A six-month call option on stock X, with an
1st)
The current price of stock X is $80. The annually compounded risk-free rate is 5%.
A six-month call option on stock X, with an exercise (strike) price of $70 is trading at $12.30.
A six-month put option on stock X, with an exercise (strike) price of $70 is trading at $0.61.
- What is the intrinsic value (exercise value) of the call option?
- What Is the time value (time premium) of the call option?
- What is the no-arbitrage minimum value (lower bound) for the call option?
- What is the intrinsic value (exercise value) of the put option?
- What is the time value (time premium of the put option?
- What is the no-arbitrage minimum value (lower bound) for the put option show all work
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