Consider an American put option on XAL stock with a strike price of $49 and one year
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Consider an American put option on XAL stock with a strike price of $49 and one year to expiration. Assume XAL pays no dividends, it is currently trading for $8 per share, and the one-year interest rate is 8%. If it is optimal to exercise this option early:
a. What is the price of a one-year American put option on XAL stock with a strike price of $63 per share?
b. What is the maximum price of a one-year American call option on XAL stock with a strike price of $49 per share?
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Related Book For
Corporate Finance The Core
ISBN: 9781292158334
4th Global Edition
Authors: Jonathan Berk, Peter DeMarzo
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