Suppose the strike price on a European call is $26 and the time to expiration is 6 months. The risk-free rate of interest is 3% simple quarterly rate. The underlying stock price is currently $24. In three months, the stock price will either increase by a factor of 1.100 or decrease by a factor of 0.909. In the subsequent three months the stock price will again either rise or decline by the same factor. a) What is the value of this call option? b) A digital call is similar to an ordinary European call except the payoff is altered. A digital call pays the holder $1 if the underlying stock price at expiration is greater than strike price, but pays nothing otherwise. Suppose the call described above was a digital call. What is the value of this digital call? Suppose the strike price on a European call is $26 and the time to expiration is 6 months. The risk-free rate of interest is 3% simple quarterly rate. The underlying stock price is currently $24. In three months, the stock price will either increase by a factor of 1.100 or decrease by a factor of 0.909. In the subsequent three months the stock price will again either rise or decline by the same factor. a) What is the value of this call option? b) A digital call is similar to an ordinary European call except the payoff is altered. A digital call pays the holder $1 if the underlying stock price at expiration is greater than strike price, but pays nothing otherwise. Suppose the call described above was a digital call. What is the value of this digital call