Suppose that the exchange rate is $0.92/€. Let r$ = 4%, and r€ = 3%, u = 1.2, d = 0.9, T = 0.75, n = 3, and K = $0.85.   1. What is the price of a 9-month European call? 2. What is the price of a 9-month American call?  Please show step by step from the beginning.

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Chapter1: Investments: Background And Issues
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Suppose that the exchange rate is $0.92/€. Let r$ = 4%, and r= 3%, u = 1.2, d = 0.9, T = 0.75, n = 3, and K = $0.85.

 

1. What is the price of a 9-month European call?

2. What is the price of a 9-month American call?

 Please show step by step from the beginning. 

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