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A stock has a current price of $75 with a risk-free rate of 8% and volatility of 20% per period. There is also a clause
A stock has a current price of $75 with a risk-free rate of 8% and volatility of 20% per period. There is also a clause in the option contract saying if the price of the stock ever hits $100 or higher, the strike price will be immediately and permanently changed to $100. Find the current value of an American Call option with a strike price of $70. Use a three-period binomial model for this question.
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