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Suppose interest rates are 12% continuously compounded, and a certain stocks share price is $20 today. If the share price can take only one of
- Suppose interest rates are 12% continuously compounded, and a certain stocks share price is $20 today. If the share price can take only one of the two values $18 or $27 in six months time and the seller takes no commission, what is the fair price per share for a call option with strike price $21 and maturity date six months?
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