Calculate the price of american call option

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A stock is worth TL40 today. In a year, the stock price can rise by 20% or fall by 10 percent. If the risk-free rate is 5 percent and the stock is expected to pay a dividend of 3 percent at the end of the second period, calculate the price of an American call option that expires in three years and has an exercise price of TL50.

Reference no: EM131994078

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