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SHOW YOUR WORK TO GET CREDIT FOR ANY CALCULATIONS Explain the effect of time to expiration on call and put premiums. Explain 3 different ways

SHOW YOUR WORK TO GET CREDIT FOR ANY CALCULATIONS

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Explain the effect of time to expiration on call and put premiums. Explain 3 different ways the time value of an option can be zero.

Find the 2 different arbitrage opportunities in this table. Explain why these are arbitrage opportunities. Explain (no need for a table) how to capture the profit on these opportunities. Premiums Exercise risk free Price Calls Puts T 150 5.5799 2.8909 0.0822 5.00% 155 3.4278 5.0017 0.0822 5.00% 160 1.2445 10.1298 0.0822 5.00% rate Stock price 155 American Options Find the 2 different arbitrage opportunities in this table. Explain why these are arbitrage opportunities. Explain (no need for a table) how to capture the profit on these opportunities. Premiums Exercise risk free Price Calls Puts T 150 5.5799 2.8909 0.0822 5.00% 155 3.4278 5.0017 0.0822 5.00% 160 1.2445 10.1298 0.0822 5.00% rate Stock price 155 American Options

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