Assume only two states will exist one year from today when a call on Delta Transportation, Inc.,
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Assume only two states will exist one year from today when a call on Delta Transportation, Inc., stock expires. The price of Delta stock will be either \($60\) or \($40\) on that date. Today, Delta stock trades for \($55.\) The strike price of the call is \($50.\) The rate at which you can borrow is 9 percent. How much are you willing to pay for a contract of this call?
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