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Business, 11.11.2019 18:31 trapqueenriz12

You are attempting to value a call option with an exercise price of $130 and one year to expiration. the underlying stock pays no dividends, its current price is $130, and you believe it has a 50% chance of increasing to $155 and a 50% chance of decreasing to $105. the risk-free rate of interest is 8%. based upon your assumptions, calculate your estimate of the the call option's value using the two-state stock price model.

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You are attempting to value a call option with an exercise price of $130 and one year to expiration....
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