Question: Please use excel and show formulas! Will like if a correct answer, thank you. ABC Company has call option written on its common stock shares.
Please use excel and show formulas! Will "like" if a correct answer, thank you.
ABC Company has call option written on its common stock shares. The exercise price for each call option is $30, and the call options expire in one year. Each share of ABC Company's common stock can be bought or sold for $27.80 a share in today's market. In addition, one year from today the price per share is expected to change to either $28 a share or $34 a share. The Treasury bill rate (i.e., the risk-free rate) is 5 percent per year. Calculate the current value of ABC Company's call option. (HINT: Binomial!) Multiple Choice $.76 O $.92 $.79 $.95 O $.89
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