Farrah-Fowler Pharmacology stock pays no dividends and is currently priced at $108. Over the next year, the stock has a 50% chance of increasing to $130 and a 50% chance of decreasing to $86. The T-bill rate is 10%. Calculate the price of a call option on Farrah-Fowler Pharacology with an exercise price of $108 using the two-state stock price model. (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Price of call option
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Determine the current stock price: $50.00 Show more…
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