1. Compute for the following call option on a non-dividend paying stock. The stock is selling for 20. The strike price is 22. The possible prices of the underlying stock at the end of 12 months are 30 and 15. The continuously compounded interest rate is 5%. Using the binomial model, which of the following is closest to ?
   1. .20
   2. .35
   3. .50
   4. .65
   5. .80
2. Which is closest to the fair price for the option in the previous question?
   1. 1
   2. 2
   3. 3
   4. 4
   5. 5