ABC shares are currently trading at $23 The following options are also trading on ABC shares, both with a strike of $24 and 18 months until expiry Call options trading at $3 32 You calculate the fair price of this call option is $3 68 Put options trading at $3 20 You calculate the fair price of the put option is $2 94 The risk free rate is 5 compounded continuously Required Are any of the bounds violated Show all working

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ABC shares are currently trading at $23. The following options are also trading on ABC shares, both with a strike of $24 and 18 months

ABC shares are currently trading at $23. The following options are also trading on ABC shares, both with a strike of $24 and 18 months until expiry:

Call options trading at $3.32. You calculate the fair price of this call option is $3.68.
Put options trading at $3.20. You calculate the fair price of the put option is $2.94.

The risk free rate is 5% compounded continuously.

Required:

Are any of the bounds violated? Show all working.

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