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1. Consider a stock that is priced at $200 today and a call option on that stock that gives you the right but not the
1. Consider a stock that is priced at $200 today and a call option on that stock that gives you the right but not the obligation to buy the stock at $225 in one years time. There are only two scenarios: either an upside, on which the price rises to $300 or a downside that leads to a drop of $100. The risk free interest rate (rf) is 8%. What is the value of this option?
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