The risk-free rate of return is 3.5 percent. illustrate, Ask an Expert

Economics

The common stock of Trynor's, Inc. is currently priced at $37.90 a share. One year from now, the stock price is expected to be either $38 or $43 a share. The risk-free rate of return is 3.5 percent. What is the current value of one call option on this stock if the exercise price is $40?

a. $0.64

b. $0.71

c. $0.77

d. $0.82

e. $0.91

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Business Economics, Economics

Category:- Business Economics
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