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The current price of Rock Pound Corporation stock is $10. In the next year, this stock price can either increase by 20% or decrease by
The current price of Rock Pound Corporation stock is $10. In the next year, this stock price can either increase by 20% or decrease by 10% every six months. Rock Pound pays no dividends. The effective semi-annual risk free interest rate is 2%, which will remain constant forever. Using the risk neutral binomial model, calculate the price of a one-year European call option on Rock Pound stock with a strike price of $10
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