Question: a) Explain how the Black-Scholes option pricing model is an extension of the binomial model. b) Use the Black-Scholes formula to calculate the price of

a) Explain how the Black-Scholes option pricing model is an extension of the binomial model.

b) Use the Black-Scholes formula to calculate the price of a call option given the following information: S = $50 , X = $55 , r = 1% , T = 1 , = 20% .

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