Find the price of a call option on the stock

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The current price of a stock is $15. In 6 months, the price will be either $18 or $11. The annual risk-free rate is 7%. Find the price of a call option on the stock that has a strike price of $12 and that expires in 6 months. (Hint: Use daily compounding.) Round your answer to the nearest cent. Assume a 365-day year. Do not round your intermediate calculations.

Reference no: EM131305106

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