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Please help me to answer these questions. Please explain the answer as well. Thanks. Chose, at random, a stock that offers both a call and
Please help me to answer these questions. Please explain the answer as well. Thanks.
Chose, at random, a stock that offers both a call and put option on it (look at the Australian Financial Review or the website of an Options Exchange), a) Work out whether the lower and upper boundary conditions of the call and put options are being maintained, b) Determine whether Put-Call parity holds. If it doesn't, explain possible reasons for it not holding. A friend of yours tells you she holds a call option that is very deep-in-the-money. She tells you she's going to exercise it now and cash in on her winnings. Is this a wise move to make? A friend of yours tells you he holds a put option that is very deep-in-the-money. He tells you he's going to exercise it now and cash in on his winnings. Is this a wise move to make? You notice two call options on the market that are costing the same. However, the expiration dates are different. If everything else is the same, how can this be the case? Your friend is about to offer an American call option on the market. However, she decides to be a little different and set no maturity date for the option. What would be the maximum and minimum value you would pay for this option? Will an option's time value be greatest when the stock price is near the exercise price, when the option is deep-in-the-money, or deep out-of-the-moneyStep by Step Solution
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