How would you carry out the practical pricing of this option

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Reference no: EM131187707

Consider a forward which gives the right and obligation to buy a stock at a fixed price K during a period [t₁, t₂]. Thus is if the option has not been exercised before t₂, it must be exercised at t2. How will the price of this derivative compare to that of an ordinary forward? How will it compare to the price of a American call option exercisable across the period [t₁, t₂]? How would you carry out the practical pricing of this option?

Reference no: EM131187707

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