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You are attempting to value a call option with an exercise price of $150 and one year to expiration. The underlying stock pays no dividends, its current price is $150, and you believe it has a 50% chance of increasing to $180 and a 50% chance of decreasing to $120. The risk-free rate of interest is 6%. Based upon your assumptions, calculate your estimate of the the call option's value using the two-state stock price model. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Value of the call $

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91774183

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