A stock is currently trading at a price of 22.You observe the following prices for European call options on the stock (the strikes are in parentheses): $C ( 20 ) = 3.25$ , $C ( 22 ) = 1.95$ ,and $C ( 24 ) = 0.40$ .You can conclude from this that

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Quizplus · Accepted Answer

The prices of the calls are inconsistent with no-arbitrage because the value of call options should decrease as the strike price increases, which is observed, but the specific prices may not align with the expected decrease based on no-arbitrage conditions.

A Stock Is Currently Trading at a Price of 22 C(20)=3.25C ( 20 ) = 3.25C(20)=3.25

A Stock Is Currently Trading at a Price of 22 $C ( 20 ) = 3.25$