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A binary option pays off $500 if a stock price is larger than $60 in three months. The current stock price is $61 and the

A binary option pays off $500 if a stock price is larger than $60 in three months. The current stock price is $61 and the volatility of returns is 20% per year. The risk-free rate is2% and the expected return on the stock is 8%. What is the value of the option? What is the real-world expected payoff?

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