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The current price of ABC Industries stock is $50. In the next year the stock price will either go up by 10% or go down
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The current price of ABC Industries stock is $50. In the next year the stock price will either go up by 10% or go down by 20%. ABC pays no dividends. The one year risk-free rate is 5% and will remain constant.
Using the binomial pricing model, the calculated price of a one-year call option on ABC stock with a strike price of $50 is closest to:
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