Question: 5. A binary option pays off $100 if a stock price is greater than $35 in two years. The current stock price is $25 and

5. A binary option pays off $100 if a stock price is greater than $35 in two years. The current stock price is $25 and its volatility is 30% per annum. The risk-free rate is 3% and the expected return on the stock is 10%. What would be the value of the option in one year for the worst 5% scenario

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