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4. Consider a European call option on a non-dividend-paying stock where the stock price is $50, the strike price is $48, the risk-free rate is

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4. Consider a European call option on a non-dividend-paying stock where the stock price is $50, the strike price is $48, the risk-free rate is 4% per annum, the volatility is 20% per annum, and the time to maturity is six months. Value the option using a two- step tree. (15 marks)

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