Determine the probability that the price of the stock

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The current price of a stock is $122. The stock’s annual continuously compounded dividend yield is 2%. The volatility of the stock is 30%.

The continuously compounded expected return on the stock is equal to the continuously compounded risk-free interest rate.

A 1-year asset-or-nothing call option has a trigger price of $120 and a premium of $71.75.

Determine the probability that the price of the stock is above $120 at the end of the year.

The answer options are .4233, .4658, .4700, .4814, .5123

Reference no: EM131975135

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