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Unformatted text preview: the option. Security buyers may borrow any fraction of the purchase price at the short-term, risk-free rate. Short-term selling is permitted without penalty, and sellers receive immediately the full cash proceeds at today's price for securities sold short. The call option can be exercised only on its expiration date. Security trading takes place in continuous time, and stock prices move randomly in continuous time....
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This note was uploaded on 07/13/2011 for the course FIN 4414 taught by Professor Staff during the Spring '08 term at University of Florida.
- Spring '08