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  3. consider a stock currently priced at $40. in the n

Consider a stock currently priced at $40. In the next period, the stock can either...

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Finance

Consider a stock currently priced at $40. In the next period, the stock can either increase by 20 percent or decrease by 10 percent. Assume a call option with an exercise price of $40 and a riskfree rate of 6 percent.

What is the theoretical value of the call for the stock according to one-period binomial model?

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\table[[Month,Un Produced,Total Cost],[January,27,500,$21,500 \table[[Month,Un Produced,Total Cost],[January,27,500,21,500],[February,22,500,20,500],[March,25,000,25,000],[April,35,000,21,500],[May,47,500,25,500],[June,17,500,18,500],[July,30,000,23,500],[August,52,500,28,500],[September,37,500,26,000],[October,62,500,29,000],[November,67,500,31,000],[December,57,500,26,000]] Colculate: MIN units...