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

Question

Quizplus · Accepted Answer

11ea6d0e_c3d5_7f39_b3c7_bde13ce7e59d_TB1223_00 11ea6d0e_c3d5_7f3a_b3c7_75a2f856ae1a_TB1223_00 Δ = (C_u - C_d) / (S_u - S_d) 11ea6d0e_c3d5_a64b_b3c7_c57c3388dde9_TB1223_00 11ea6d0e_c3d5_a64c_b3c7_2592f5406d6e_TB1223_00 11ea6d0e_c3d5_a64d_b3c7_29e0bbcd5da3_TB1223_00 11ea6d0e_c3d5_a64e_b3c7_1baeea2ce233_TB1223_00 11ea6d0e_c3d5_a64f_b3c7_730e089a1f8d_TB1223_00 11ea6d0e_c3d5_cd60_b3c7_378db3cb4c16_TB1223_00 11ea6d0e_c3d5_cd61_b3c7_af574e7fc831_TB1223_00

A Stock with a Current Price of $43 Will Either