11.) Consider a stock trading at $400 that can go up or down by 20 percent per period. The risk-free rate is 8%. Using the one period binomial model: a. Determine the two possible stock prices for the next period. b. Determine the intrinsic value at expiration of a European call with an exercise price of $420. C. Find the value the option today. 4

11.) Consider a stock trading at $400 that can go up or down by 20 percent per period. The risk-free rate is 8%. Using the one perlod binomial model: a. Determine the two possible stock prices for the next period. b. Determine the intrinsic value at expiration of a European call with an exercise price of $420. c. Find the value of the option today