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Over the coming year, Ragwort s stock price will halve to $ 8 0 from its current level of $ 1 6 0 or it
Over the coming year, Ragworts stock price will halve to $ from its current level of $ or it will rise to $ The oneyear interest rate is
What is the delta of a oneyear call option on Ragwort stock with an exercise price of $
Note: Round your answer to decimal places.
What is the amount of the loan in the replicating portfolio?
Note: Do not round intermediate calculations. Round your answer to decimal places.
Given the delta computed in part a how much would be borrowed if the replicatingportfolio method was used to value the call option?
Note: Do not round intermediate calculations. Round your answer to decimal places.
In a riskneutral world, what is the probability that Ragwort stock will rise in price?
Note: Round your answer to decimal places.
Using the riskneutral method, what is the value of the call option?
Note: Do not round intermediate calculations. Round your answer to decimal places.
If someone told you that in reality there is a chance that Ragwort's stock price will rise to $ would you change your view about the value of the option?
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