Question: Use the hedge-based method to price a call option given the following scenario: The asset is currently selling for $10. Six months from now, the

Use the hedge-based method to price a call option given the following scenario: The asset is currently selling for $10. Six months from now, the asset will be worth either $10 or $15. The strike price on the option is $12. The annual interest rate is 5%. Why is this call price unusually low? Show all work.

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