10.1. What is a lower bound for the price of a six-month call option on a non-dividend-paying stock when the stock price is $80, the strike price is $75, and the risk-free interest rate is 10% per annum?

$8.66

Explanation:

From the question,  given are

stock price = $80

strike price = $75

interest rate = 10% per annum = 0.10?

time duration = 6month = 6month/12 = 0.5

The lower bound is denoted by the equation

X - (Se-i × t)

Where

(X) is the strike price

(S) the spot price

i is the interest rate and

t is the time duration of the call option

 Therefore 

The lower bound = 80 - (75e^ -0.1x0.5)

       = $8.66

because she sucked. : )

(but so does trump, don't @ me)

answer: tell me how

explanation: