3. Suppose two call options on IBM stock with the same expiration of 1 year, call option A’s strike price is $100 and the implied volatility is 20% and call option B’s strike price is $110 and the implied volatility is 25%, then
Option A is overpriced, and B is underpriced
Option A is underpriced, and B is underpriced
Option A is underpriced, and B is overpriced
4. Cannot be determined