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2) 25 points) A stock price is currently $50. It is known that at the end of two months it will be either $46 or

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2) 25 points) A stock price is currently $50. It is known that at the end of two months it will be either $46 or $54. The risk-free rate of interest with continuous compounding is 5% per year. Furthermore, AO) = 1.0. Suppose that S(T) denotes the stock price at the end of two months. a) Find the price (today) of a contingent claim that pays off S (T) at the end of two months. b) Find the replicating strategy

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