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A Share of Stock Is Currently Priced at $20 and Will

Question 45

Multiple Choice

A share of stock is currently priced at $20 and will change with equal likelihood to either $50 or $10.A call option with a $25 exercise price is available on the stock.How many shares of stock must be purchased to replicate the payoff from owning one call option?


A) .50 share
B) .75 share
C) .80 share
D) 1.25 shares

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