You believe that a company's shares will, in each of the following 2 years, either from by 25% in value, or fall by 10% in value.

The current share price is 100 and the risk free rate is 5% per year. What would be a fair price for a call option which expires in (a) one year and (b) two years with an exercise price of 115?

(Q2) if the exercise price is reduced to 113, what will be the new one-and-two year option prices?