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Calculate the price of a six-month European call option

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Question - Assume that over each of the next 3-month periods, the stock is expected to go up by 10% or down by 8%. The risk-free interest rate is 5% and the strike price K=19. Calculate the price of a 6-month European call option using a 2-step binomial tree and provide your u, d, P, 1-P, stock price and call option price in each tree node, and the option price today.

Reference no: EM132927508

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