Calculate the value of a two-year call option on alpha share, Finance Basics

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Calculate the value of a two-year call option on alpha share

Problem

The current share price of Mesna Corporate is $8. The share price can go up or down by $2 in a given Marks year over the next two years. The risk-free interest rate (rf) is 3%. The strike price of the call option written on this share is $8.

Using the Binomial option valuation model, calculate the value of a 2-year call option on Alpha shares.

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Finance Basics: Calculate the value of a two-year call option on alpha share

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Finance Basics: Calculate the value of a two-year call option on alpha share

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