Hi, Could someone explain why is the max value for European call is S(t) while not its discounted value, i.e. S(t)/(1+RFR)^(T-t) since it is only exercisable at expiration date t=T? Thanks!
T=t so (1+rfr)^(T-t) = (1+rfr)^0 = 1
thank u.
Hi, Could someone explain why is the max value for European call is S(t) while not its discounted value, i.e. S(t)/(1+RFR)^(T-t) since it is only exercisable at expiration date t=T? Thanks!
T=t so (1+rfr)^(T-t) = (1+rfr)^0 = 1
thank u.