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Consider a one-step binomial tree on stock with a current price of $200 that can go either up to $230 or down to $170 in
Consider a one-step binomial tree on stock with a current price of $200 that can go either up to $230 or down to $170 in 2 years. The stock does not pay dividend. Continuously compounding interest rate is 5%. Compute the payoff of a 2-year $210-strike European call option on the stock if the stock price ends up at the $230 node of the tree in 2 years.
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