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A stock has an asset price of $50. Bobby and Christine both believe the stock will go up 20% one year or it will go
A stock has an asset price of $50. Bobby and Christine both believe the stock will go up 20% one year or it will go down 20% one year from now ($40 or $60) <-- I am assuming either one of those is the answer. Bobby believes the probability of the stock going up to $60 one year from now is only 70%, while Christine believes the probability that it will go up to $60 in a year which is only 30%. If the risk free rate of return is 3.5%, what is the value of the call option one year from now?
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