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Category > Business & Finance Posted 15 Jul 2017 My Price 7.00

The Two-State Option Model

The Two-State Option Model

You bought a 100-share call contract three weeks ago. The expiration date of the calls is five weeks from today. On that date, the price of the underlying stock will be either $120 or $95. The two states are equally likely to occur. Currently, the stock sells for $96; its strike price is $112. You are able to purchase 32 shares of stock. You are able to borrow money at 10 percent per annum. What is the value of your call contract?

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Status NEW Posted 15 Jul 2017 09:07 AM My Price 7.00

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