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You are attempting to value a call option with an exercise price of $109 and one...

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Finance

You are attempting to value a call option with an exercise priceof $109 and one year to expiration. The underlying stock pays nodividends, its current price is $109, and you believe it has a 50%chance of increasing to $139 and a 50% chance of decreasing to $79.The risk-free rate of interest is 10%. Calculate the call option'svalue using the two-state stock price model. (Do not roundintermediate calculations and round your final answer to 2 decimalplaces.)

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Step 1 Calculate the option value at expiration based upon your assumption of a 50 chance of increasing to 139 and a 50 chance of decreasing to 79 The two possible stock prices    See Answer
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You are attempting to value a call option with an exercise priceof $109 and one year to expiration. The underlying stock pays nodividends, its current price is $109, and you believe it has a 50%chance of increasing to $139 and a 50% chance of decreasing to $79.The risk-free rate of interest is 10%. Calculate the call option'svalue using the two-state stock price model. (Do not roundintermediate calculations and round your final answer to 2 decimalplaces.)

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