1. Is it more valuable to own an option to buy a portfolio of stocks or to own a portfolio of options to buy each of the individual stocks? Say briefly why.
2. Table 20.4 lists some prices of options on common stocks (prices are quoted to the nearest dollar). The interest rate is 10% a year. Can you spot any mispricing? What would you do to take advantage of it?
Stock
Time to Exercise (months)
Exercise Price
Stock Price
Put Price
Call Price
Drongo Corp.
6
$ 50
$80
$20
$52
Ragwort, Inc.
100
80
10
15
Wombat Corp.
3
40
50
7
18
5
17
8
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