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Problem 4. Edward and Jeffrey are friends. Every morning they read a newspaper. Edward's choice is The Washington Post, while Jeffrey prefers The New York
Problem 4. Edward and Jeffrey are friends. Every morning they read a newspaper. Edward's choice is The Washington Post, while Jeffrey prefers The New York Times. (a) [7 pts) The Washington Post published this morning that for an expiration date of a year from now (with 5% interest) the price of a call option C60(70,t) is $9 and the price of a put option P60(70,t) is $4. How can Edward use this information to make some money?! (b) [8 pts] The New York Times assure that for an expiration date of a year from now (with 5% interest) C7068,t) is $9 and P70(68,t) is $4. How can Jeffrey use this information to his advantage? Problem 4. Edward and Jeffrey are friends. Every morning they read a newspaper. Edward's choice is The Washington Post, while Jeffrey prefers The New York Times. (a) [7 pts) The Washington Post published this morning that for an expiration date of a year from now (with 5% interest) the price of a call option C60(70,t) is $9 and the price of a put option P60(70,t) is $4. How can Edward use this information to make some money?! (b) [8 pts] The New York Times assure that for an expiration date of a year from now (with 5% interest) C7068,t) is $9 and P70(68,t) is $4. How can Jeffrey use this information to his advantage
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