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The current price of a stock is $50. In 1 year, the price will be either $65 or $35. The annual risk-free rate is 10%.
The current price of a stock is $50. In 1 year, the price will be either $65 or $35. The annual risk-free rate is 10%. Find the price of a call option on the stock that has an exercise price of $55 and that expires in 1 year. (Hint: Use daily compounding.)
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