A Stock with a Current Price of $43 Will Either

question 49

Multiple Choice

A stock with a current price of $43 will either move up by a factor of 1.20 or down by a factor of 0.80 each period over the next two periods.The risk-free rate of interest is 3 percent.What is the current value of a call option with a strike price of $45?

• A) $4.38
• B) $4.55
• C) $4.72
• D) $5.16
• E) $5.27

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