Expected value of a call and a put option

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Alice wants to invest in the stock of XYZ Inc., and is trying to decide whether she should purchase shares, call options or put options. 

She estimates that, as of October 16 (when the options expire), XYZ stock will be worth one of three possible prices: $48, $63, or $69. She estimates that each of these prices is equally likely. 

For each of the following, be sure to show all of your work. 

If her estimates are in line with those of the market and the market is efficient, what will be the market price of XYZ shares, and what what will be the expected value of a CALL and a PUT option with a strike price of $60? 

Should I calculate the expected value of the share as 1/3 for question, and how is it different to calculate the E.V. of a put than a call?

Reference no: EM132097048

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