Suppose that on January 18, 1994, Lotuss stock was valued at $75.00 per share instead of $55.00.

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Question:

Suppose that on January 18, 1994, Lotus’s stock was valued at $75.00 per share instead of $55.00. What is the very least you would expect to pay for the February 1994 call option excercisable at $55? What is the most? In general, what factors should enter into a determination of the appropriate price to pay?