$3.$ A random gealthcare stock is currently trading at $50.$ JD wants to value two$-$year options using the binomial

model. In any year, the stock will either increase in value by $20\%$ or fall in value by $20\%.$ The annual

risk$-$free interest rate is $6\%.$ No dividends are paid. You construct a two$-$period binomial tree for the

value of the stock. Calculate the value of a European call option on the stock with an exercise price

of $60.$

Hint: Calculate the price of C$1($call option price at year $1)$ first, then reversely calculate call option

price now, C$0.$