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A call option has an exercise of R70 and is at expiration. The option costs R4, and the underlying stock trades for R75. 7.1 Assuming
A call option has an exercise of R70 and is at expiration. The option costs R4, and the underlying stock trades for R75. 7.1 Assuming a perfect market, how would you respond if the call is an American option? State exactly how you might transact. [5] 7.2 How does your answer in 7.1 differ if the option is European? [2]
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