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Calculate the value today of a one-year call option

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Question - Frankfurt Euroshop AG shares are currently selling for €12. Over the next year, the company is undertaking a new supermarket project. If the project is successful, the company's shares are expected to rise to €24. If the project fails, the shares are expected to fall to €8. The risk free interest rate is 6 per cent. Calculate the value today of a one-year call option on one Frankfurt Euroshop share with a strike price of €20?

Reference no: EM132946015

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