Required: You are attempting to value a call option with an exercise price of $80 and...
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Required: You are attempting to value a call option with an exercise price of $80 and one year to expiration. The underlying stock pays no dividends, its current price is $80, and you believe it has a 50% chance of increasing to $90 and a 50% chance of decreasing to $70. The risk-free rate of interest is 5%. Consider one share of stock and two written calls. Calculate the call option's value using the two- state stock price model. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Value of the call Required: You are attempting to value a call option with an exercise price of $80 and one year to expiration. The underlying stock pays no dividends, its current price is $80, and you believe it has a 50% chance of increasing to $90 and a 50% chance of decreasing to $70. The risk-free rate of interest is 5%. Consider one share of stock and two written calls. Calculate the call option's value using the two- state stock price model. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Value of the call
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