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Can someone provide an example of how arbitrage would be used when an american call option can be bought for less than max(final stock - strike,0)?

Merton writes Further it follows from conditions of arbitrage that $$\tag{3}F(S,\tau;E)\ge{\rm Max}(0,S-E)\,.$$ In general , a relation like (3) need not hold for a European warrant. This is the ...
Kurt G.'s user avatar
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Solving Equation for estimation risk averse parameter

You can think about it like this: given $\mu,\sigma,r$, a risk aversion parameter $\gamma$ will induce an optimal weight $w(\gamma)$, which in turn will induce some value at risk $VaR_{\alpha}$. Hence ...
Kermittfrog's user avatar
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