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The current price of a stock is $22, and at the end of one year its price will be either $27 or $17.  The annual risk-free rate is 6.0%, based on daily compounding.  A 1-year call option on the stock, with an exercise price of $22, is available.  Based on the binominal model, what is the option’s value?


The current price of a stock is $50, the annual risk-free rate is 6%, and a 1-year call option with a strike price of $55 sells for $7.20.  What is the value of a put option, assuming the same strike price and expiration date as for the call option?