Question: Question 7 . Consider a one - period binomial model in which the current stock price is $ 6 1 and can either go up

Question 7. Consider a one-period binomial model in which the current stock price is $61 and can either go up by 22% or down by 18%. A European call option has a strike price of $60 and expires in one-period. The risk-free rate is 4.1%. A (mispriced) call can be purchased for $8. What rate of return will the hedge portfolio earn?
Question 7. Consider a one-period binomial model in which the current

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