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In binomial approach of option pricing model, value of stock is subtracted from call option obligation value to calculate

A. current value of portfolio

B. future value of portfolio

C. put option value

D. call option value

Answer: Option A

Solution(By Examveda Team)

In binomial approach of option pricing model, value of stock is subtracted from call option obligation value to calculate current value of portfolio. It is referred to as mark-to-market and involves multiplying the current share price of the stock by the number of shares owned and summing these values for a total portfolio value.

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