Question
All reliable analysts agree that a share of ABC Corp., selling today for $50, will be priced at either $65 or $45 1 year from
All reliable analysts agree that a share of ABC Corp., selling today for $50, will be priced at either $65 or $45 1 year from now. They further agree that the probabilities of these events are 0.6 and 0.4, respectively. The market risk-free rate is 6%. What is the value of a CALL option on ABC whose exercise price is $50 and which matures in 1 year?
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Financial Management EMEA Theory And Practice
Authors: Michael Ehrhardt, Roland Fox, Eugene Brigham
2nd Edition
1473760216, 9781473760219
