Price of a stock is $15. In 6 months, the price will be either

jagguarpaw January 18, 2017 0 Comments

Question: The current price of a stock is $15. In 6 months…

The current price of a stock is $15. In 6 months, the price will be either $18 or $13. The annual risk-free rate is 6%. Find the price of a call option on the stock that has a strike price of $14 and that expires in 6 months. (Use daily compounding) Binomial Model