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A stock current priced at 60 has volatility of 25% and pays continuous dividends at an annual rate of 2%. The risk-free rate is 3%
A stock current priced at 60 has volatility of 25% and pays continuous dividends at an annual rate of 2%. The risk-free rate is 3% (annual, continuously compounded). Use a 2-period binomial model to price a 1-year European call on this stock with a strike of 62.
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