Question: Assume a stock whose current price is$100. During the next year, there is 75%chance that the price of the stock goes up to$110 and 25%

Assume a stock whose current price is$100. During the next year, there is 75%chance that the price of the stock goes up to$110 and 25% chance that it goes down to$90. Now assume that a forward option exists on this stock having a strike price of$100 and matures at the end of the year. The value of this option at the end of the year will be$10 if the stock price is$110 and 0 if the stock price is $90. Assuming the interest rate to be zero, estimate the price of this option today.

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