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For a share S the market quotes a given strike K in both european andamerican styles....

For a share S the market quotes a given strike K in both european andamerican styles. Use an arbitrage argument to construct a formula relating the price of the european to the price of an american.

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Answer #1

F=(r-I)*T*S

F= Price of Eurpoean

R= Rate at European

I= Rate at American

S= Price of American.

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