Multiple Choice
The stock price of Apax Inc. is currently $105. The stock price a year from now will be either $130 or $90 with equal probabilities. The interest rate at which investors can borrow is 10%. Using the binomial OPM, the value of a call option with an exercise price of $110 and an expiration date 1 year from now should be worth ________ today.
A) $11.59
B) $15
C) $20
D) $40
Correct Answer:
Verified
Correct Answer:
Verified
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