studyn

Its a European option:

29 - (25/(1.04^(219/365) = 4.58

UGhhh

Shortcut: European lower bound must be = or > the American lower bound. If this were american, it would already be worth $4 plus the time value portion, so must be > $4. the european must at least equal the american, so the number >$4 is the only correct choice.



Edited 1 time(s). Last edit at Friday, June 5, 2009 at 02:44PM by june2009.