In class the equation for the valuation of a put option was


In class the equation for the valuation of a put option was derived. This is the expected value of the present value of the (nonnegative) payoff obtained in exercising the option. This is the Black-Scholes-Merton equation. Mimicking that derivation, derive the equation for a call option. I wrote down on the board the first few steps; you just need to write down the 2-3 additional steps.

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Financial Management: In class the equation for the valuation of a put option was
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