Put-call parity hold for american options

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Reference no: EM131882949

1. Calculate the payoff at expiration for a call option on the euro in which the underlying is at $1.07 at expiration, the options are on 20,000 euro, and the exercise price is $1.065.

2. Why doesn’t put-call parity hold for American options?

3. Calculate the payoff at expiration for a put option on the British pound in which the underlying is at $1.225 at expiration, the options are on 225,000 British pounds, and the exercise price is $1.215.

Reference no: EM131882949

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