A stock currently has a market value of $12.50. The risk-free rate of return is 3%. In one year, the stock is expected to sell for either $11.00 or $17.00. What is the value of a twelve-month call option with a strike price of $10?
A) -$4.00
B) $0
C) $1.29
D) $1.82
E) $2.79

Question

Quizplus · Accepted Answer

The Answer of A stock currently has a market value of $12.50. The risk-free rate of return is 3%. In one year, the stock is expected to sell for either $11.00 or $17.00. What is the value of a twelve-month call option with a strike price of $10?
A) -$4.00
B) $0
C) $1.29
D) $1.82
E) $2.79

A Stock Currently Has a Market Value of $12