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Continuing with the Power Plant from the Previous Question,suppose Instead

Question 23

Multiple Choice

Continuing with the power plant from the previous question,suppose instead the price of coal next month could be $54 or $66 (with equal probability) .Now how much would it be willing to pay for an option to buy a ton of coal oil next month at today's price?


A) 5
B) 4
C) 3
D) 0

Correct Answer:

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