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16. Suppose that there are two possible states of the economy, A and B, in year T. A stock's price in year T will depend
16. Suppose that there are two possible states of the economy, A and B, in year T. A stock's price in year T will depend on the economic state as in the table below. A risk-free bond currently sells for $8 and it will pay $10 in year T in every state. stock bond state A $150 $10 state B $80 $10 In addition, we also see a year-T European call option on the stock above. The call has the strike price of $100 and currently sells for $20. What is the current stock price? (6 points]
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