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- Exercise 5.3. Let the present price (in dollars) of a stock be S(0) = $100 per share. Suppose its price after time I will

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- Exercise 5.3. Let the present price (in dollars) of a stock be S(0) = $100 per share. Suppose its price after time I will be either S(T) = $110 or $90. (a) Suppose that the risk-free return from time 0 to T is 8%. Find the cost of the call option for the stock with strike price $108 and exercise time T. (b) Suppose that the risk-free return from time 0 to T is 5%. Find the cost of the call option for the stock with strike price $108 and exercise time T

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