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38. Suppose a stock is currently trading at $50. The risk-free rate is 2%. Consider the following two ending states for a one-period binomial

38. Suppose a stock is currently trading at $50. The risk-free rate is 2%. Consider the following two ending states for a one-period binomial option pricing model State Up Stock price 60 Down 40 What is the value of a call option with a strike price of 45? *a. $8.08 b. $5.17 c. $14.71 d. $7.35 e. $9.36 Factor Increase/Decrease .2 .2

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