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Topic: Binomial option pricing Given a stock price of $18, an exercise price of $20, and an interest rate of 7%, what are the intrinsic

Topic: Binomial option pricing

Given a stock price of $18, an exercise price of $20, and an interest rate of 7%, what are the intrinsic values which will occur for a one period binomial option model if the stock price goes up to $23 or down to $16?

A. $3 and $0 B. $3 and -$4 C. $4 and $3 D. $4 and $2

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