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Value of the call option-ervin corp

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Reference no: EM132700739

The price of Ervin Corp. stock will either be $61 or $90 at the end of the year. Call options are available with one year until expiration. Continuously compounded T-bills currently yield 5.07 %. Suppose the current price of Ervin stock is $76.

What is the value of the call option, using the risk-free approach, if the strike price is $75 per share? (Round answer to 2 decimal places. Do not round intermediate calculations).

Reference no: EM132700739

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