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The intrinsic value is $70 - $60. However, we don't know exactly what the stock price will end up in a one-year time. But we know that it it is the best estimate for the future price in one-year. Profit in one-year = ($70 * 1/D - $60) where D is the discount factor. This profit needs to be discounted: $70 - $60 * D. You should be able to relate the ...



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