Binomial pricing: Assume that the shares of Gizmo Motors are currently trading for $17 and will either rise to $23 or fall to $12 in one year. The risk-free rate for one year is 10 per cent. What is the value of a call option with a strike price of $25?
A) $0
B) $6.23
C) $5.72
D) None of the above
Correct Answer:
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