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You are evaluating a call option on F with a strike price of $491 . If F is able to develop a new technology, the
You are evaluating a call option on
F
with a strike price of
$491
.\ If
F
is able to develop a new technology, the price per share will go up to
$761
. Otherwise, the price will go down to
$214
. Let's assume that these are the only two possible scenarios. F shares today are trading at
$530
. You know that the risk-free rate is
5%
.\ What is the price of this call option?
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