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QUESTION 1 Currently, a call option on Bayou stock is available with an exercise price of 5100 and an expiration date one year from now.

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QUESTION 1 Currently, a call option on Bayou stock is available with an exercise price of 5100 and an expiration date one year from now. Assume that the price of Bayou Corporation stock today is $100 Furore, it is estimated that Bayou stock will be selling for eller 575 or $143 in one year Aho, assume that the annual the interest rate on a one year Treasury bilis 10 percent, continuously compounded. Therefore, the T-bil will pay $100 (0:1), or $11025 Find the call option premium using the Binomial model For example, if you find that the call option premium is 1245 type this number in the box below

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