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Consider a European call option on a non dividend-paying stock. This option is priced using a two-period binomial tree. You are given:
(i) The option expires in two years.
(ii) The continuously compounded risk-free interest rate is 9%.
(iii) The current price of call option is $3.89.
(iv) The payoff of the call option at each of the three terminal nodes are: CUU=10, CUD=2, CDD=0
Calculate the risk-neutral probability of an up-move:
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Banana Box Corporation has sales of $4,603,950; income tax of $469,586; the selling, general and administrative expenses of $203,073; depreciation of $343,754; costs of goods sold of $2,950,310; and interest expense of $192,871. Calculate the amount ..
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