Suppose an american call option is in the money so s gt x, Ask an Expert

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Suppose an American call option is in the money, so S > X. Demonstrate that the market price of this call (C) cannot be less than the difference between the stock price and the exercise price. That is, explain why this must be true: C ≥ S - X.

(Hint: consider what would happen if C S - X.)

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92070295

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