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What can we say about the prices of c and p

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Reference no: EM131168936

Let P be a digital put struck at K1 and C be a digital call struck at K2. (A digital put pays 1 if spot is below the strike at expiry, and a digital call pays I if spot is above the strike.) What can we say about the prices of C and P in each of the following cases?

(i) K1 = K2;

(ii) K1 2;

(iii) K1 > K2.

Reference no: EM131168936

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