Question: Use the binomial option pricing model to price a call option. The option has a maturity of one year and a strike price of 95-1/8.

Use the binomial option pricing model to price a call option. The option has a maturity of one year and a strike price of 95-1/8. The current one year rate is 4% and it could either go up to 4.8% or down to 3-1/8%. Each rate has a 50-50 chance of occurring. For this question, use discrete discounting (divide by 1.01 if the rate is 1%, rather than using e-.01)

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