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A stock is worth $20 today, and it may increase or decrease $5 over the next year.

A stock is worth $20 today, and it may increase or decrease $5 over the next year.If the risk-free rate of interest is 6%, calculate the market price of the at the money put and call options on this stock that expire in one year. Which option is more valuable, the put or the call? Is it always the case that a call option is worth more that a put if both are tied to the same underlying stock, have the same expiration date, and are at the money.

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Solution of 531910_FIN.xls

Question;A stock is worth $20 today, and it may increase or decrease $5 over the next year. If the risk-free rate
of interest is 6 percent, calculate the market price of the at-the money put and...

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