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Madeline Manufacturing Inc. ' s current stock price is $ 3 5 per share. Call options for this stock exist that permit the holder to
Madeline Manufacturing Inc.s current stock price is $ per share. Call options for this stock exist that permit the holder to purchase one share at an exercise
price of $ These options will expire at the end of year, at which time Madeline's stock will be selling at one of two prices $ or $ The riskfree rate is
Using the binomial option pricing model, create a riskless hedged investment and answer the following question:
After the payoffs have been equalized and the riskless hedged investment is created, what is the value of the portfolio in one year? Round your answer to the
nearest cent.
$
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