Ex $6$: Consider a stock currently priced at $$85.$ In the next period, the stock can either increase by $30$ percent or decrease by $20$ percent. Assume a call option with an exercise price of $$80$ and a risk$-$free rate of $6\mathrm{.}5$ percent.

a$.$ What is the current value of option?

b$.$ Suppose the call option is currently trading at $$14.$ This option is being priced overvalued or undervalued by investors?

c$.$ If the option is mispriced, what amount of riskless return can be earned using a riskless hedge?

Requirements: working in excel file