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Suppose a share of stock sells for $60. The risk-free rate is 6 percent, and the stock price in one year will be either $66
Suppose a share of stock sells for $60. The risk-free rate is 6 percent, and the stock price in one year will be either $66 or $76. (Leave no cells blank - be certain to enter "0" wherever required.)
a. | What is the value of a call option with an exercise price of $66? |
Call option value | $ |
b. | Calculate the minimum return on the stock required to get the option in the money. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
Minimum stock return | % |
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