1. A stock selling for $25 today will, in one year, be worth either $35 or $20....

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1. A stock selling for $25 today will, in one year, be worth either $35 or $20. If the interest rate is 8 percent, what is the value today of a one-year call option on the stock with exercise price $30? Use the simultaneousequation approach of section 14.1 to price the option.

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Financial Modeling

ISBN: 9780262024822

2nd Edition

Authors: Simon Benninga

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