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GS Inc pays continuous dividends on its stock at an annual continuously compounded yield of 9%. The stock is currently selling for $10. In one

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GS Inc pays continuous dividends on its stock at an annual continuously compounded yield of 9%. The stock is currently selling for $10. In one year, its stock price could either be $15 or $7. The risk-neutral probability of the increase in the stock price is 41.3%. Using the one-period binomial option pricing model, what is the annual continuously-compounded risk-free interest rate? Answer: 12%

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