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The current price of Kinston Corporation stock is $ 1 0 . In each of the next two years, this stock price can either go
The current price of Kinston Corporation stock is $ In each of the next two years, this stock price can either go up by $ or go down by $ Kinston stock pays no dividends. The one year riskfree interest rate is and will remain constant. Using the binomial pricing model, claculate the value of a twoyear atthemoney call option on Kinston stock.
a What is the value of call option at year if the stock price goes up Mark the correct answer.
$
$
$
$
$ OK
Mark out of
The correct answer is:
$
b What is the value of call option at year if the stock price goes down? Mark the correct answer.
$
$
$
$
$ OK
Mark out of
The correct answer is:
$
c What is the value of call option at year Mark the correct answer.
$
$
$
$
$
Mark out of
The correct answer is:
$
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