What is the lower bound for the price of a six-month call, Financial Management

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What is the lower bound for the price of a six-month call

1. What is the lower bound for the price of a six-month call option on a nondividend paying stock when the stock price is $80, the strike price is $75 and the risk free rate is 10 percent per annum?

2. When the underlying stock trades at $40, the strike price is $40, a 95 day call option is priced at $5 and a 95 day put option is priced at $5 (both with an exercise price of $40). Assume that you buy a straddle.

a. Determine all the mathematical profit and payoff positions for this portfolio.

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Financial Management: What is the lower bound for the price of a six-month call

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Financial Management: What is the lower bound for the price of a six-month call

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