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Consider an option to buy euro 12,500 for pound 10,000. In the next period, the euro can strength against the pound by 25% ( each
Consider an option to buy euro 12,500 for pound 10,000. In the next period, the euro can strength against the pound by 25% ( each euro will buy 25 percent more pounds) or weaken by 20 percent. Using risk neutral valuation, find the value of the call (in pounds)
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