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All you know is that the spot price for Tesla at $580 per share. You do not know the forward rates for any period. Is
All you know is that the spot price for Tesla at $580 per share. You do not know the forward rates for any period.
Is a Call on Tesla stock, Strike= $590 per share Expiring in 3 months much more expensive than
a call with a strike of $600 expiring in 2 years? (Hint: can you price an option without the forward price?)
A. | Yes because $590 is closer to being ATM
| |
B. |
No because $600 is a higher number than $590 | |
C. | Not enough data to determine that. At a minimum you'd need to know the forward rate for each of those periods
| |
D. | They are exactly the same price |
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