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8. A stock price is $40 now. In one month it can go 10% up or down. In the second month it can go 10%

8. A stock price is $40 now. In one month it can go 10% up or down. In the second month it can go 10% up or down. The annual interest rate is 11% with continuous compounding. Use risk-free portfolios to determine the value of the a

a)Two-month European call with strike price 40.

b)Two-month European call with strike price 41

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