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Question: The price of Chive Corp. stock will


The price of Chive Corp. stock will be either $57 or $84 at the end of the year. Call options are available with one year to expiration. T-bills currently yield 4 percent.
a. Suppose the current price of the company’s stock is $65. What is the value of the call option if the exercise price is $50 per share?
b. Suppose the exercise price is $60 in part (a). What is the value of the call option now?


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