You are considering the sale of a call option with an, Ask an Expert

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You are considering the sale of a call option with an exercise price of $ 150 and one year to expiration. The underlying stock pays no dividends, its current price is $152 and you believe it has a chance of rising to $ 156 and a chance of falling to $ 144. The risk-free rate of interest is 3%. Compute the call option’s fair value (equilibrium price) by applying the binomial (two-sate) option pricing model.

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Financial Management, Finance

Category:- Financial Management
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