Find the value of european call option with exercise price

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Reference no: EM13971103

A stock currently sells for $50. In six months, it will either rise to $55 or decline to $45. The risk-free interest rate is 6% per year.

1. Find the value of a European call option with an exercise price of $50.

2. Find the value of a European put option with an exercise price of $50, using the binomial approach.

3. Verify the put-call parity using the results of Questions 1 and 2.

Reference no: EM13971103

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