Yegi’s Fine Phones has a current stock price of $30. You need to find the value of a call option with a strike price of $32 that expires in 3 months. Use the binomial model with one period until expiration

(i.e., t = 0.25 and n = 1). The factor for an increase in stock price is u = 1.15; the factor for a downward movement is d = 0.85. What are the possible stock prices at expiration? ($34.50 or $25.50)

What are the option’s possible payoffs at expiration? ($2.50 or

$0) What are pu and pd? (0.5422 and 0.4429) What is the current value of the option (assume each month is 1/12 of a year)?