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The price of Ervin Corp. stock will either be $64 or $90 at the end of the year. Call options are available with one year
The price of Ervin Corp. stock will either be $64 or $90 at the end of the year. Call options are available with one year until expiration.Continuously compoundedT-bills currently yield 3.7 %. Suppose the current price of Ervin stock is $78.
What is the value ofthe call option, using therisk-free approach, if the strike price is $55 per share? (Round answer to 2 decimal places. Do not round intermediate calculations).
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