Binominal model-option value, Finance Basics

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Binominal model-option value

The current price of a stock is $22, and at the end of one year its price will be either $27 or $17. The annual risk-free rate is 6.0%, based on daily compounding. A 1-year call option on the stock, with an exercise price of $22, is available. Based on the binominal model, what is the option's value?

a. $2.43

b. $2.70

c. $2.99

d. $3.29

e. $3.62

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Finance Basics: Binominal model-option value

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Finance Basics: Binominal model-option value

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Recent Questions Asked Finance Basics

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Request for Solution File

Ask an Expert for Answer!!

Finance Basics: Binominal model-option value

Reference No:- TGS042761

Recent Questions Asked Finance Basics

Q : Office expenses for the business use

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Q : Compute this machine''s accounting rate of return

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