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You have to price a call ( using binomial pricing model ) that expires in 3 months with an exercise price of $12. The risk-free
You have to price a call (using binomial pricing model) that expires in 3 months with an exercise price of $12. The risk-free rate of return is 0.05 and the volatility is 0.03*sqrt(12). The stock is currently priced at $10. Use a time step of a month.
Please show values at each time step and formulas used
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