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Consider a One-Period Binomial Model of 12 Months

Question 16

Multiple Choice

Consider a one-period binomial model of 12 months.Assume the stock price is $54.00,σ = 0.25,r = 0.04 and the exercise price of a call option is $55.What is the forecasted price of the stock given an upward movement during the year?


A) $56.16
B) $61.01
C) $65.12
D) $72.16

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