Learning Outcomes:Explain the role of arbitrage in option pricing including minimum value, maximum value, value at expiration, and lower bound.
Identify the factors that affect an option’s price.
Explain the difference between American and European options.
Describe put-call parity.
3.2 Action Required:Read the following to prepare for this week:
Chapter 3
Videos
Watch the short video in the following link:
https://www.youtube.com/embed/I0Xa5wlmM_A?rel=0
3.3 Test your Knowledge (Question):Q. Discuss the factors that affect an option’s price?
3.4 Instructionsyour answer needs not to exceed 100 words.
