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Q1. Two-State Option Pricing Model - T-bills currently yield 4.2 percent. Stock in Nina Manufacturing is currently selling for $79 per share. There is no

Q1. Two-State Option Pricing Model - T-bills currently yield 4.2 percent. Stock in Nina Manufacturing is currently selling for $79 per share. There is no possibility that the stock will be worth less than $72 per share in one year.

a) What is the value of a call option with a $62 exercise price?

b) What is the intrinsic value? Round to nearest whole number.

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