When using the simple two-state model to value a call option, suppose that in one of the states the call is "out of the money," and in the other state the call is "in the money." In order to replicate the payoffs to the underlying asset, one must purchase call options and invest the present value of the _____ price in a riskless asset.

Multiple choice question.

exercise

out-of-the-money stock

in-the-money stock