The Current Price of a Non-Dividend-Paying Stock Is $30

question 14

Multiple Choice

The current price of a non-dividend-paying stock is $30.Over the next six months it is expected to rise to $36 or fall to $26.Assume the risk-free rate is zero.What is the risk-neutral probability of that the stock price will be $36?

• A) 0.6
• B) 0.5
• C) 0.4
• D) 0.3