Question: 10.12 A binary option pays off $500 if a stock price is greater than $60 in three months. The current stock price is $61 and

10.12 A binary option pays off $500 if a stock price

10.12 A binary option pays off $500 if a stock price is greater than $60 in three months. The current stock price is $61 and its volatility is 20%. The risk-free rate is 2% and the expected return on the stock is 8%. What is the value of the option? What is the real-world expected payoff

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