Consider a stock currently priced at $40. In the next period, the stock can either...
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Consider a stock currently priced at $40. In the next period, the stock can either increase by 20 percent or decrease by 10 percent. Assume a call option with an exercise price of $40 and a riskfree rate of 6 percent.
What is the theoretical value of the call for the stock according to one-period binomial model?
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