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Spencer calculates that shares of Tardis Intertemporal, currently trading at $100, will either increase to $200 or decrease to $50 in one year with a 50/50 probability.

Spencer is considering a one year $175.00 call option. The simple interest rate is 10.250%.

The price per share of leveraged stock is $

The hedge ratio is 1/

The price of the call option should be per share.

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M92870786

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