Tan Yoon has agreed to sell 50 shares of a stock to his brother in two monthsfor
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will accept the offer and Tan will receive only $2,500 for an asset worth $2,834.35.Otherwise, the stocks will have a market price of less than $2,500, so Tan's brother will
not accept the offer to buy the stock from Tan.
Suppose that Tan Yoon notes that he could purchase a call option having as underlier100 shares of the same stock, expiration in two months, and strike price $5,000, andthat it has a non-arbitrage price X, based on a risk-free annual effective interest rateof 5%. Find X.
Related Book For
Modern Advanced Accounting in Canada
ISBN: 978-1259087554
7th edition
Authors: Hilton Murray, Herauf Darrell
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