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Basic Question 0 of 3
Assume a stock price is $55 and that in the next year it will either rise by 20% or fall by 16%. The risk-free interest rate is 5%. A call option on this stock has an exercise price of $60. What is the price of a call option that expires in one year?
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Learning Outcome Statements
formulate an investment problem as a probability tree and explain the use of conditional expectations in investment application
CFA® 2026 Level I Curriculum, Volume 1, Module 4.