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What is the current value of a call option

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Reference no: EM132975770

Question - The Circle's stock is currently traded at €15. In each quarter, its price can increase by 25% or decrease by 20%. It is also known that the quarterly risk-free interest rate is 4%. Under these circumstances, what is the current value of a call option with an exercise price of €17 and expiration in six months. Use the two-stage binomial method.

Reference no: EM132975770

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