A binary option pays off $500 if a stock price is greater than $60 in three months. The current stock price is $61 and its volatility is 20%. The risk-free rate is 2% and the expected return on the stock is 8%.

A. What is the value of the option?

B. What is the real-world expected payoff?

please show and explain all work.. List all variables and explain where your answers are coming from