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Suppose you recently got a job offer from Amazon. As part of its employee incentive plan, the employment contracts grant you the right to buy
Suppose you recently got a job offer from Amazon. As part of its employee incentive plan, the employment contracts grant you the right to buy 100 shares of Amazon stock one year from now (European call option) with an exercise price of $2500. The current price of Amazon is $3300 per share. Based on its historical volatility, you estimate that the Amazon stock will be either $2475 or $4400 on expiration date. What is the total value of the option contained in the offer letter if the risk-free rate is 2% for one year
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