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Determine the two possible stock prices for the next period

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Reference no: EM132705462

Consider a stock worth $25 that can go up or down by 15 percent per period. The risk-free rate isrf = 10 percent. Use one binomial period.

a. Determine the two possible stock prices for the next period.

b. Determine the intrinsic values at expiration of a European call option with an exercise price of K = $25.

c. Find the value of the option today.

Reference no: EM132705462

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