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Textbook Solution
Business
Corporate Finance
Let S 40 K 45 0 30
Let S 40 K 45 0 30
Let S = $40, K = $45, σ = 0.30, r = 0.08, T = 1, and δ = 0.
a. What is the price of a standard call?
b. What is the price of a knock-in call with a barrier of $44? Why?
c. What is the price of a knock-out call with a barrier of $44? Why?
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