Based on the single-period binomial model

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Suppose the price per share of Dans stock today is $30 and it is known that the price in three months will be either $20 or $35. If the strike price on a call option for one share of this stock is $28, the call option expires in three months, and the risk-free interest rate is 5%, determine the following based on the single-period binomial model Consider another investor Pam who wants to acquire shares of Dans stock and has $600 to invest. What is Pams potential profit/loss (in today’s dollars)if Pam spends all of his money on

(a) shares of Dans stock?

(b) call options on shares of Dans stock?

Reference no: EM132044567

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