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= 5. (3 points) Nine months ago, you bought an American call option with X= 50 and the time to the expiration date of one
= 5. (3 points) Nine months ago, you bought an American call option with X= 50 and the time to the expiration date of one year for $3 (Co=$3). The option still has three months to expire. The current price of the stock is St = 80. The interest rate is 3% per year. After three months of your option purchase, you are now considering exercising the option early. 1) (1 point) How much will you get if you exercise the call today? 2) (1 point) How much will you get if you sell the call today? 3) (1 point) Should you exercise early or sell the option today? Answer using IF function. Current stock price (So) Option exercise price, X Option exercise time, T (in years) Interest rate, r $80.00 $50.00 0.25 3% Answer Formulatext 1) gross payoff if exercised early today 2) Lower bound on American call price 3) Early exercise or sell the option today
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