Question: A call option is written on a stock whose current price is $ 5 0 . The option has maturity of three years ( date

A call option is written on a stock whose current price is $50. The option has maturity of three years (date 0 to date 3), and during this time the annual stock price is expected to increase by 25% or to decrease by 10%. The annual interest rate is constant at 6%. The option is exercisable at price of $62. What is its value today?

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