A stock is currently selling for $50.The stock price could go up by 10% or fall by 5% each month.The monthly interest rate is 1% (periodic rate) .Calculate the price of a call option on the stock with an exercise price of $50 and a maturity of two months.(Use the two-stage binomial method.)
A) $5.10
B) $2.71
C) $4.78
D) $3.62
Correct Answer:
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