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use your keyboard Q17. Consider a stock currently priced (So) at SAR 155. One period later it can go up and down by 20% to

use your keyboard

Q17. Consider a stock currently priced (So) at SAR 155. One period later it can go up and down by 20% to (Su) SAR 186 or (Sd) SAR 124

respectively and risk-free rate is 10 percent. Assume a call option with an exercise price of SAR 155 and probability of up move(p) is 0.75.

Calculate the current/theoretical value of the option using one period binomial model?

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