Consider an option that expires in 68 days the bid and ask, Ask an Expert

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Consider an option that expires in 68 days. The bid and ask discounts on the Treasury bill maturing in 67 days are 8.20 and 8.24, respectively.

Find the approximate risk-free rate ? What would happen in the options market if the price of an American call were less than the value Max(0, S0 - X)? Would your answer differ if the option were European?

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