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Binomial Option-Pricing Model: Consider a stock currently priced at S 0 = $100. Suppose the periodic interest rate is 10%. Furthermore, assume that there are

Binomial Option-Pricing Model:

Consider a stock currently priced at S₀ = $100. Suppose the periodic interest rate is 10%. Furthermore, assume that there are two possible states for the stock price in the next period (each equally likely), S_T = 130 and S_T = 80. Use the binomial option-pricing model to determine the price of a call option with X = $110.

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