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Intro The current price of a non-dividend paying stock is $1,259 and you expect the...

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Finance

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Intro The current price of a non-dividend paying stock is $1,259 and you expect the stock price to either go up by a factor of 1.153 or down by a factor of 0.895 each period for 2 periods over the next 0.8 years. Each period is 0.4 years long. A European call option on the stock has a strike price of $1,259 and expires in 0.8 years. The risk-free rate is 4% (annual, continuously compounded). Part 1 . Attempt 1/8 for 10 pts. What is the risk-neutral probability of an up movement? 2+ decimals Submit Part 2 Attempt 1/8 for 10 pts. What is the option payoff in 0.8 years if the stock price went up twice in a row? 0+ decimals Submit Part 3 1 Attempt 1/8 for 10 pts. What is the value of the option in 0.4 years if the stock price has gone up once? 0+ decimals Submit Part 4 | Attempt 1/8 for 10 pts. What is the value of the option in 0.4 years if the stock price has gone down once? 1+ decimals Submit Attempt 1/8 for 10 pts. Part 5 What is the current value of the option? 0+ decimals Submit

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