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7. Consider a call option on one share of BP with a strike price of $70 and exercise time 1 quarter (3 months). Suppose the

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7. Consider a call option on one share of BP with a strike price of $70 and exercise time 1 quarter (3 months). Suppose the current stock price for BP is S(0) $65 per share Suppose further that A(0) $100, A(1) $102 and two possible prices for S(1) are $74 with probability 0.5, $66 with probability 0.5. Evaluate the expected returns E(Ks) and E(K for the stock and the option

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