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You are attempting to value a call option with an exercise price of $55 and one year to expiration. The underlying stock pays no dividends, its current price is $55, and you believe it has a 50% chance of increasing to $85 and a 50% chance of decreasing to S2 The risk-free rate ofinterest 5% 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.)

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Financial Management, Finance

Category:- Financial Management
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