The price of MDD, Inc., stock will be either $79 or $101 at the end of the year. Call options are available with one year to expiration. T-bills currently yield 4 percent.
a. Suppose the current price of MDD stock is $90. What is the value of the call option if the exercise price is $75 per share? (Round your answer to 2 decimal places. (e.g., 32.16)) Call value $
b. Suppose the current price of MDD stock is $90. What is the value of the call option if the exercise price is $85 per share? (Round your answer to 2 decimal places. (e.g., 32.16)) Call value $