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The current price stock XYZ is RM20. In 3 months, it will be either RM22 or RM18. A 3-month call option on XYZ stock has

The current price stock XYZ is RM20. In 3 months, it will be either RM22 or RM18. A 3-month call option on XYZ stock has a strike price of 21. The risk-free rate is 12%. Using binomial tree, estimate the intrinsic price (premium) of the 3-month call options.
Note:
1. Determine whether you should use one-step, two-step or three-step binomial model.

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