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4. A stock price is currently R50. It is known that at the end of six months it will be either R60 or R42. The

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4. A stock price is currently R50. It is known that at the end of six months it will be either R60 or R42. The risk-free rate of interest (Rf) is e0.12 per annum. Calculate the value of a six-month European call option on the stock with an exercise price of R48. Verify that no-arbitrage arguments and risk-neutral valuation arguments give the same answers. [6ma

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