Computer Science homework help
Computer Science homework help. Problem A. Consider a non-dividend paying stock.(1) Prove that a European Call for it expiring at T has value C >= max(0, S-K*d(0,T)), where d(0,T) is the time discout factor (today’s value of $1 at T). Hint: Consider buying a call vs buying a stock and getting a loan of K*d(0,T) from a bank. Problem B. Use Problem A to prove that the price of a perpetual (i.e. never expiring) call for non-dividend paying stock is the current stock price.
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