(Solution Download) The price of Build A Fire Corp stock will be


The price of Build A Fire Corp. stock will be either $62 or $86 at the end of the year. Call options are available with one year to expiration. T-bills currently yield 4 percent.
a. Suppose the current price of the company's stock is $70. What is the value of the call option if the exercise price is $65 per share?
b. Suppose the exercise price is $75 in part (a). What is the value of the call option now?

 







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