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Properties of Stock Options (9) The risk-free interest rate is 10 percent per annum with continuous compounding. and the time Documents Similar To introoptions.

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r annualized continuously compounded risk free rate Illustration with a Call Option Consider a call option on a stock Options: Valuation and (No) Arbitrage

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Stock-based compensation. Incentive stock options under the tax code will not necessarily be noncompensatory under GAAP. Risk free interest rate.

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We cannot use the risk-free interest rate, The future values of the stock and the options are depicted in the "tree" in Figure 2.1, Figure 2.1.