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Consider a stock currently priced at $ 8 0 . In the next period, the stock can either increase by 3 0 percent or decrease
Consider a stock currently priced at $ In the next period, the stock can either increase by percent
or decrease by percent. Assume a call option with an exercise price of $ and a riskfree rate of
percent. Suppose the call option is currently trading at $ If the option is mispriced, what amount
of riskless return can be earned using a riskless hedge?
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