The current price of a stock is $122. The stock’s annual continuously compounded dividend yield is 2%. The volatility of the stock is 30%.
The continuously compounded expected return on the stock is equal to the continuously compounded risk-free interest rate.
A 1-year asset-or-nothing call option has a trigger price of $120 and a premium of $71.75.
Determine the probability that the price of the stock is above $120 at the end of the year.
The answer options are .4233, .4658, .4700, .4814, .5123