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1. Consider the following binomial option model. Stock price is 100 dollars now. In 1 year it can go to 120 dollars or 80 dollars.

1. Consider the following binomial option model. Stock price is 100 dollars now. In 1 year it can go to 120 dollars or 80 dollars. Interest rate with annual compounding is 10 percent. What is the price of a 1 year call with strike 110.

2. What are the risk neutral probabilities in the model of problem 1 that give the same price.

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