The following table lists some prices of options on common stocks. The interest rate is 10 percent
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Question:
The following table lists some prices of options on common stocks. The interest rate is 10 percent a year. Can you spot any mispricing? What could you do to take advantage of it?
| Stock | Time to Exercise (months) | Exercise Price | Stock Price | Put Price | e Call Price |
| Furbish Lousewort | 6 | 100 | 90 | 10.00 | 15.00 |
| Quercus Alba | 6 | 50 | 60 | 2.00 | 10.00 |
| Fagus Sylvatica | 3 | 50 | 50 | 4.60 | 8.00 |
| Fagus Sylvatica | 6 | 50 | 50 | 5.60 | 8.00 |
| Fagus Sylvatica | 12 | 10 | 50 | 0.00 | 40.00 |
Expert Answer:
Related Book For 
Principles of Corporate Finance
ISBN: 978-0072869460
7th edition
Authors: Richard A. Brealey, Stewart C. Myers
Posted Date:
