Suppose P Is the Current Price of a European Put $\le$

question 13

Multiple Choice

Suppose p is the current price of a European put and p_A is that for an American put,where the two options have identical terms and conditions and differ only in terms of the early exercise feature.If B = $0.96 is today's price of a zero-coupon bond that matures on the option's expiration date and K = $50 is the strike price,then the following statement is correct:

• A) p \(\le\) $50 and p_A \(\le\) 48
• B) p \(\ge\) $24 and p_A \(\le\) 25
• C) p \(\le\) $48 and p_A \(\le\) 50
• D) p \(\le\) $48 and p_A \(\ge\) 48
• E) None of these answers are correct.

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