USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 81

Multiple Choice

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
The following information is provided in the context of a two-period (two six-month periods) binomial option pricing model. A stock currently trades at $60 per share, and a call option on the stock has an exercise price of $65. The stock is equally likely to rise by 15 percent or fall by 15 percent during each six-month period. The one-year risk free rate is 3 percent.
-Refer to Exhibit 16.2. Calculate the price of the call option after the stock price has already moved up in value once (C_u) .

• A) $7.77
• B) $14.35
• C) $0
• D) $4.21
• E) $6.44

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Definitions:

Transmitting Information

The process of sending data, messages, or information from one place, person, or group to another through specific channels.

Neurons

Neurons are the basic working units of the brain and nervous system, responsible for receiving, processing, and transmitting information through electrical and chemical signals.

Cell Body

The spherical part of a neuron that contains the nucleus and connects to the dendrites and axon, critical for processing information.

Axon

A long, slender projection of a neuron that conducts electrical impulses away from the neuron's cell body to other neurons, muscles, or glands.