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A six-month Twitter call option with an exercise price of $50.00 was traded at $4.25 per option on February 27, 2015. Assume that the risk free rate was 1.2% per year and stock price for Twitter on February 27, 2015 was $48.08. Twitter Inc. does not plan to pay dividends in the coming year. What was the implied price volatility (variance) of the underlying stock price?

(Hint: Use Goal Seek program in Excel.)

Financial Management, Finance

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