The Price of Time Squared Corp

question 58

Multiple Choice

The price of Time Squared Corp.stock will be either $80 or $95 at the end of the year.Call options are available with one year to expiration.T-bills currently yield 6 percent and the current price of Time Squared Corp.stock is $85.What is the value of a call option if the exercise price is $75 per share?

• A)$14.25
• B)$15.06
• C)$18.78
• D)$24.25
• E)$25.06

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