9. This question deals with a Sprint-like repricing situation (see Section 18.2 for details of the Sprint scheme). Assume that the current stock price is S = 24, the volatility of the stock price is 45%, and the risk-free rate is 4%. Use the Black-Scholes model to answer the following questions.
(a) Consider an option with a strike price of K = 32 and six years left to maturity. Ignoring dividends, would you trade it in for a forward start call specified as in Sprint's scheme?
(b) What if the option had only one year to maturity?
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