Value of call option on the stock with exercise price

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We will derive a two-state call option value in this problem. Data: S0 = 300; X = 310; 1 + r = 1.1. The two possibilities for ST are 350 and 150.

Calculate the value of a call option on the stock with an exercise price of 310. (Do not use continuous compounding to calculate the present value of X in this example, because the interest rate is quoted as an effective per-period rate.) (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Reference no: EM131493147

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