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A stock currently sells for $50. In six months,it will either rise to $55 or decline to $45. The risk-free interest rate is 6% per
A stock currently sells for $50. In six months,it will either rise to $55 or decline to $45. The risk-free interest rate is 6% per year.
- Find the value of a European call option with an exercise price of $50.
- Find the value of a European put option with an exercise price of $50, using the binomial approach.
- Verify the put-call parity using the results ofQuestions 1and2.
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Accounting concepts and applications
Authors: Albrecht Stice, Stice Swain
11th Edition
978-0538750196, 538745487, 538750197, 978-0538745482
