Graph the value of a call option

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Reference no: EM131247171

1. Figure graphs the value of a call option as a function of the value of the underlying stock. Graph the value of a call option (vertical axis) against
a) a, the instantaneous standard deviation of the returns on the underlying asset;

b) rf , the risk-free rate;

c) T, the time to maturity.

2. What are the conditions under which an American put would be exercised early on a stock that pays no dividends?

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Reference no: EM131247171

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