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Introductory Statistics
1st Edition
ISBN: 9781938168208
Author: Barbara Illowsky, Susan Dean
Publisher: OpenStax College
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Chapter 7, Problem 89H
Salaries for teachers In a particular elementary school district are
a. Find the 90th percentile for an individual teacher’s salary
b. Find the 90th percentile for the average teacher’s salary.
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We consider four options on this market: A European call option with maturity T = 2 years and strike price K = 5; A European put option with maturity T = 2 years and strike price K = 5; An American call option with maturity T = 2 years and strike price K = 5; An American put option with maturity T = 2 years and strike price K = 5.(a) Find the price at time 0 of both European options.(b) Find the price at time 0 of both American options. Compare your results with (a)and comment.(c) For each of the American options, describe the optimal exercising strategy.(d) We assume that you sell the American put to a market participant A for the pricefound in (b). Explain how you act on the market…
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Chapter 7 Solutions
Introductory Statistics
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