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Posted on Jul 28, 2024

A stock is worth $ 5 0 today. In one period the stock will either be worth $ 6 0 or $ 4 0 .

A stock is worth $

50

today. In one period the stock will either be worth $

60

or $

40 .

The risk

-

free rate over the period is

5 % (

you can both borrow and lend at this rate

) .

What is today's price of a call option expiring in one period with a $

55

strike price?

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