Suppose a Stock Is Currently Trading for $12,and in One

Multiple Choice

Suppose a stock is currently trading for $12,and in one period it will either increase to $15 or decrease to $8.If the one-period risk-free rate is 4%,what is the price of a European call option that expires in one period and has an exercise price of $7?

A) $4.68
B) $4.50
C) $5.27
D) $5.00
E) $7.00