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What is the value of the call option now

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Reference no: EM133110548

The price of Tara, Inc. stock will be either $60 or $80 at the end of the year. Call options are available with one year to expiration. T-Bills currently yield 5%.

a) Suppose the current price of Tara stock is $70. What is the value of the call option if the exercise price is $45 per share?

b) Suppose the exercise price is $70 in part (a). What is the value of the call option now?

Reference no: EM133110548

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