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3. Consider an option on a non-dividend-paying stock when the stock price is $30, the exercise price is $29, the risk-free interest rate is 5%

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3. Consider an option on a non-dividend-paying stock when the stock price is $30, the exercise price is $29, the risk-free interest rate is 5% per annum, the volatility is 25% per year, and the time to maturity is four months. a. What is the price of option if it is a European call? b. What is the price of option if it is a European put? c. Verify that put-call parity holds

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