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Consider the following one binomial option pricing involving an American call. Assume a stock price currently at RM 1 1 0 and call option with

Consider the following one binomial option pricing involving an American call. Assume a stock price currently at RM110 and call option with an exercise price of RM110 and a risk-free rate of 7%. In the next period, the stock can be either increase and decrease by 15% and10% respectively. Proof if the call price is mispricing?

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Heres how we can analyze the potential mispricing of the call option 1 Data Summary Stock Price S RM110 Exercise Price X RM110 RiskFree Rate r 7 Upwar... blur-text-image

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