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

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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 simultaneous equation approach of section 17.2 to price the option.

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Financial Modeling

ISBN: 9780262026284

3rd Edition

Authors: Simon Benninga

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