Question
If we take two European-type options that have payoffs P1(ST ) = max(1 ST , 0) and P2(ST ) = max(1 ST , 0) where
If we take two European-type options that have payoffs P1(ST ) = max(1 ST , 0) and P2(ST ) = max(1 ST , 0) where stock price ST can take any value greater than zero.
Both options have the same maturity date and are written on the same stock. Which of these options costs more at date 0?
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Investments An Introduction
Authors: Herbert B Mayo
9th Edition
324561385, 978-0324561388
