The current price of Estelle Corporation stock is ($25.) In each of the next two years, this

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The current price of Estelle Corporation stock is \($25.\) In each of the next two years, this stock price will either go up by 20% or go down by 20%. The stock pays no dividends. The one-year risk-free interest rate is 6% and will remain constant. Using the Binomial Model, calculate the price of a one-year call option on Estelle's stock with a strike price of \($25.

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Corporate Finance

ISBN: 9781292446318

6th Global Edition

Authors: Jonathan Berk, Peter DeMarzo

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