Given a Stock Price of $18, an Exercise Price of $20

Multiple Choice

Given a stock price of $18, an exercise price of $20, and an interest rate of 7%, what are the intrinsic values which will occur for a one-period binomial option model if the stock price goes up to $23 or down to $16?

A) $3 and $0
B) $3 and −$4
C) $4 and $3
D) $4 and $2