Question: The price of Chive Corp. stock will be either $67 or $91 at the end of the year. Call options are available with one year

The price of Chive Corp. stock will be either $67 or $91 at the end of the year. Call options are available with one year to expiration. T-bills currently yield 4 percent.

  1. Suppose the current price of the company's stock is $75. What is the value of thecall option if the exercise price is $60 per share?
  2. Suppose the exercise price is $80 in part (a). What is the value of the call option now?

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