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Determine the value of a one-year european call option

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Question - A stock price is currently $100. Over each of the next two six-month periods it is expected to go up by 10% or down by 10%. The risk-free interest rate is 8% per annum with continuous compounding. Using a two-step Binomial model determine the value of a one-year European call option with a strike price of $100?

Reference no: EM132995029

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