A stock with a current price of $37 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 4 percent.What is the current value of a call option with a strike price of $40?
A) $4.16
B) $4.42
C) $4.71
D) $5.09
E) $5.13

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Quizplus · Accepted Answer

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A Stock with a Current Price of $37 Will Either