Question
A call option on the stock of Bovisand has an exercise price of $56 and time to maturity of one year. The current stock price
A call option on the stock of Bovisand has an exercise price of $56 and time to maturity of one year. The current stock price is $59. In one year's time the price of the stock will rise to $65 or fall to $53. The annual riskfree interest rate is 5%. Using the replicating portfolio method calculate the call option price.
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