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1) Compute the price of an American call option with strike K=110 and maturity T=.25 years.

2) Compute the price of an American put option with strike K=110 and maturity T=.25 years.

3) Is it ever optimal to early exercise the put option of Question 2?

4) If your answer to Question 3 is "Yes", when is the earliest period at which it might be optimal to early exercise? (If your answer to Question 3 is "No", then you should submit an answer of 15 since exercising after 15 periods is not an early exercise.)

5) Do the call and put option prices of Questions 1 and 2 satisfy put-call parity?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91615326

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