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Consider a European call option on a stock, with a $40 strike and 1 year to expiration. The stock does not pay dividends, and its
- Consider a European call option on a stock, with a $40 strike and 1 year to expiration. The stock does not pay dividends, and its current price is $41. Suppose the volatility of the stock is 30%
- The continuously compounded risk-free interest rate is 8%
- S = 41, r = 0.08, d = 0, s = 0.30, K=40, and h = 1
- Using these inputs, write an R code to perform the following
- calculate the final stock prices
- calculate the final option values
- calculate and B
- calculate the option price
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