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The current price of a stock is $20, and at the end of one year its price will be either $25 or $15. The annual risk-free rate is 8.0%, based on daily compounding. A 1-year call option on the stock, with an exercise price of $22, is available. Based on the binominal model, what is the option's value?

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Financial Management, Finance

Category:- Financial Management
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