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1. The current spot exchange rate is $1.30/ . The spot rate is expected to either rise 30% to $1.69 or fall 30% to $0.91.

1. The current spot exchange rate is $1.30/. The spot rate is expected to either rise 30% to $1.69 or fall 30% to $0.91. The risk-free interest rate is 2% per year.

Using the binomial model, what is the price of a European call with a strike price of $1.35? The call expires in one year. Use either method we discussed in class.

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