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Confirm that higher exercise prices mean lower call prices

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Reference no: EM13865931

Check out the delayed quotes for Google for different exercise prices and maturities.

a. Confirm that higher exercise prices mean lower call prices and higher put prices.

b. Confirm that longer maturity means higher prices for both puts and calls.

c. Choose a Google put and call with the same exercise price and maturity. Confirm that put-call parity holds (approximately). ( Note: You will have to use an up-to-date risk-free interest rate.)

Reference no: EM13865931

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