Assume that the stock of XYZ, Inc., is currently trading for $18 and will either rise to $24 or fall to $13 in one year. The risk-free rate for one year is 11 percent. What is the value of a call option with a strike price of $26?
A) $0
B) $5.23
C) $7.72
D) $2.00
Correct Answer:
Verified
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