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Consider two investors who agree on the stocks price and volatility but who do not agree on the stocks expected return. One believes that the
Consider two investors who agree on the stocks price and volatility but who do not agree on the stocks expected return. One believes that the stock will earn 15 percent over the next year, while the second believes that it will have a negative 5 percent return. Will they agree or disagree on the value of a one-year call option written on the stock? Explain your answer.
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