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The price of Ervin Corp. stock will either be $ 6 3 or $ 8 6 at the end of the year. Call options are

The price of Ervin Corp. stock will either be $

63

or $

86

at the end of the year. Call options are available with one year until expiration. Continuously compounded T

-

bills currently yield

3.5 % .

Suppose the current price of Ervin stock is $

78 .

What is the value of the call if the strike price is $

55

per share?

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