Thu 12 Nov, 2020 05:29 am
The current price of LC Corporation stock is $60. In each of the next two years, this stock price can either go up by 10% or go down by 5%. LC stock pays no dividends. The one-year risk-free interest rate is 6% and will remain constant.
Compute the price of a derivative that pays $10 if the stock goes up twice, $5 if it goes down twice and $50 otherwise.
Group of answer choices
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