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A stock price is currently $40. It is known that at the end of one month that the stock price will either increase or decrease by 9%. The risk-free interest rate is 9% per annum with continuous compounding. What is the value of a one-month European call option with a strike price of $39?
*Equations you may find helpful:
p = (e^(rΔt)-d) / (u-d)
f = e^(-rΔt) * (fu*p + fd*(1-p))
(required precision 0.01 +/- 0.01)
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