Question: Make the same assumptions as in the previous problem a What

Make the same assumptions as in the previous problem.
a. What is the price of a standard European put with 2 years to expiration?
b. Suppose you have a compound call giving you the right to pay $2 1 year from today to buy the option in (a). For what stock prices in 1 year will you exercise this option?
c. What is the price of this compound call?
d. What is the price of a compound option giving you the right to sell the option in part (a) in 1 year for $2?

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  • CreatedAugust 12, 2015
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