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Binomial Option 1 The interest rate is 4% per year simple interest. ABC Corp. stock is trading at $164.00. A European call option expiring in

Binomial Option 1

The interest rate is 4% per year simple interest. ABC Corp. stock is trading at $164.00. A European call option expiring in one year has a strike price of $165. At call option expiration, the stock price will be either $114.80 or $218.12. Find the call option premium. You may want to do this using both the arbitrage-table approach and the equivalent martingale formula and make sure you get the same answer both ways.

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