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6. Explain how an options delta/gamma and a bonds duration/convexity are similar. 7. Suppose you own an American call option on a stock that does

6. Explain how an options delta/gamma and a bonds duration/convexity are similar.

7. Suppose you own an American call option on a stock that does not pay common dividends. The call option has one month until expiration. Under what circumstances would you exercise this call option early?

8. What is the most critical variable in the Black-Scholes model? Explain.

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