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What is the price of a two-month european call option

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Reference no: EM133003322

Question - What is the price of a two-month European call option given the following information: the exercise price is $19, the current share price is $19 and the risk-free interest rate is 1% per month. Furthermore, the share price is expected to either increase by 5% or decrease by 4.762% each month. The company does not pay dividends. Assume a risk neutral world.

a) $3.11

b) $0.29

c) $0.67

d) $3.32

e) None of the above answers is correct.

Reference no: EM133003322

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