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Consider the binomial model that we saw in class. The underlying stock S can have values of Su =$140 and Sd=$80 at time t=1. What
Consider the binomial model that we saw in class. The underlying stock S can have values of Su =$140 and Sd=$80 at time t=1. What are the payoffs from a call option with strike K= $100? $40 if stock price goes up, $0 if stock price goes down. $20 if stock price goes up, $0 if stock price goes down. $0 if stock price goes up, $20 if stock price goes down. $0 if stock price goes up, $40 if stock price goes down Depends on the risk-free interest rate
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