at Mr. X buys an option from the broker Y and have to pay 2% transaction fee on the option. Mr. X follows Black & Scholes model to calculate option price. Will Mr. X include transaction fee in option pricing? Why or not? please solve without exc

Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter5: Financial Options
Section: Chapter Questions
Problem 3P: Black-Scholes Model Assume that you have been given the following information on Purcell Industries...
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D6 Finance Suppose that Mr. X buys an option from the broker Y and have to pay 2% transaction fee on the option. Mr. X follows Black & Scholes model to calculate option price. Will Mr. X include transaction fee in option pricing? Why or not? please solve without excel.
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