Question: Consider a stock which trades for $50. Consider also a European CALL option with an exercise price of $45 which expires in one year. The

Consider a stock which trades for $50. Consider also a European CALL option with an exercise price of $45 which expires in one year. The risk free rate is 5% cc. Suppose that you calculate the risk-neutral probability of an upward move to be 0.5064. What is the fair price of the option, based on a two-period binomial model?

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