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Question 2: Assume a stock price is $120, and in the next year, it will either rise by 10 percent or fall by 20 percent.

Question 2: Assume a stock price is $120, and in the next year, it will either rise by 10 percent or fall by 20 percent. The risk-free interest rate is 6 percent. A call option on this stock has an exercise price of $130. What is the price of a call option that expires in one year? What is the chance that the stock price will rise

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