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Based on this spot price of 16 and the strike price of 18 as well as the fact that the risk-free interest rate is 6%

Based on this spot price of 16 and the strike price of 18 as well as the fact that the risk-free interest rate is 6% per annum with continuous compounding, please undertake option valuations and answer related questions according to following instructions:

Use a two-step binomial tree to calculate the value of an eight-month European call option using risk-neutral valuation. [1 mark]

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