1. You are attempting to value a call option with an exercise price of $102 and 1 year to expiration. The underlying stock pays no dividends, its current price is $102, and you believe it has a 50% chance of increasing to $121 and a 50% chance of decreasing to $83. The risk-free rate of interest is 10%. Calculate the call options value using the two-state stock price model.

2.

You are attempting to value a call option with an exercise price of $102 and 1 year to expiration. The underlying stock pays no dividends, its current price is $102, and you believe it has a 50% chance of increasing to $121 and a 50% chance of decreasing to $83. The risk-free rate of interest is 12%. Calculate the call option's value using the two-state stock price model.