Determine the price of a call option

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Consider a stock currently priced at S0 = $100. Suppose the periodic interest rate is 10%. Furthermore, assume that there are two possible states for the stock price in the next period (each equally likely), ST = 130 and ST = 80. Use the binomial option-pricing model to determine the price of a call option with X = $110.

Reference no: EM132413392

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