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Company X current stock price is $150 per share. In every six month period, the price will either go up by 25% or decrease by
Company X current stock price is $150 per share. In every six month period, the price will either go up by 25% or decrease by 20%. Suppose the risk free rate is 12% per year.
A. Use the One step binomial tree to value a call option on Company X that expires in six months with an exercise price of $140
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