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Business, 15.04.2021 22:50 julie47d

Suppose that the stock is currently trading at 50. Please use the following condition and the binomial model to price the following two 2-year options. 1): Each year, the stock price either increases by 20%, or decreases by 20% 2): The annual risk-free rate is 6% Construct a two-period binomial tree for the value of the stock index. Calculate the value of a European call option with an exercise price of 60.

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Suppose that the stock is currently trading at 50. Please use the following condition and the binomi...
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