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A stock currently trades for $32. In one year, the price will either be $39 or $26. The annual risk-free rate is 4%; assume daily
A stock currently trades for $32. In one year, the price will either be $39 or $26. The annual risk-free rate is 4%; assume daily interest compounding. When trying to find the value of a one-year call option with exercise price of $29, you assume the replicating portfolio is formed from shares of the stock as well as risk-free bonds with a $1 face value. The number of shares of stock in the replicating portfolio is: ______ shares.
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