15 Binomial Model Gasworks AG has been approached to sell up to 5 million litres of gasoline...
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15 Binomial Model Gasworks AG has been approached to sell up to 5 million litres of gasoline in three months at a price of €1.85 per litre. Gasoline is currently selling on the wholesale market at €1.65 per litre and has a standard deviation of 46 per cent. If the risk-free rate is 6 per cent per year, what is the value of this option?
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