Question: Consider a stock with current price S 0 = 2 9 per share. A european call option on this stock that matures in T =
Consider a stock with current price
S per share. A european call option on this
stock that matures in
T months with strike
K costs
PC per share. You
are considering two ways to invest Plan A is to buy
shares of the stock
and sell them in months. Plan B is to buy
call options on the stock. If
ST denotes the stock price per share in months, plan B has a higher payoff a for any
ST
b if
ST
c if ST
d if
ST
e if ST
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