Investor is interested in buying european call option

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Reference no: EM131343311

An investor is interested in buying a European call option written on Apple, a non-dividend paying common stock, with a strike price of $52 and one year until expiration. Currently, Apple’s stock sells for $50 per share. In one year, the investor knows that Apple’s stock will be trading at either $55 per share or $45 per share. The investor is able to borrow and lend at the risk-free rate of 5%. What should the call option sell for today?

Reference no: EM131343311

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