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Suppose You Look in the Newspaper and See ABC Trading

question 97

Essay

Suppose you look in the newspaper and see ABC trading at $50 per share.Calls on ABC with one month to expiration and an exercise price of $45 are trading at $6.50 each.Puts on ABC with one month to expiration and an exercise price of $55 are trading at $3.50 each.Are these prices reasonable? Explain.(Ignore transactions costs.)


Definitions:

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Refers to something that brings about an effect or result, typically something that triggers an event or condition.

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A child who has not yet entered elementary school, usually in the age range of 3 to 5 years.

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The cessation of all biological functions that sustain a living organism, marking the end of life.

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Involves activities that allow individuals to reflect on their lives, share stories, and create memories that can be passed on to others, often used in palliative care or with seniors.

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