Non-Arbitrage Approach Assignment | Homework For You

1. A stock price is currently $50. It is known that at the end of 1 year it will be either $40 or $60. The risk-free interest rate is 10% per annum with continuous compounding. What is the value of a one-year European CALL option with a strike price of $50? Please use

  1. Non-arbitrage approach (8 points)
  2. Formula approach (8 points) Get Finance homework help today

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