Option valuation: Assume that the price of Socrates Motors stock will either rise to $50 or fall

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Option valuation: Assume that the price of Socrates Motors stock will either rise to $50 or fall to $35 in one month and that the risk-free rate for one month is 1.5 percent. How much is an option with a strike price of $40 worth if the current stock price is $45 instead of $40?

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Fundamentals Of Corporate Finance

ISBN: 9781119795438

5th Edition

Authors: Robert Parrino, David S. Kidwell, Thomas W. Bates

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