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Consider the binomial option pricing model. A stock is currently priced at $120 and 53 days from now the price will be either $134 or
Consider the binomial option pricing model. A stock is currently priced at $120 and 53 days from now the price will be either $134 or $98. The risk-free rate is 1.75%. a. What is the value of a call with a strike price of K = $118? Please use the arbitrage pricing version of the BOPM (i.e., the five steps version).
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