Rockford stock is trading at $20/share and can either increase to $26 or decrease to $18 over the course of one year. In a one-period binomial option model, given an interest rate of 5%, what is the price of an at-the money call on Rockford stock expiring in one year? 

Answer rating: 100% (QA)

c 0 Call price c 1 1c 1 1r p 0 Put price p 1 1p 1 1r Where Risk neutral probability 1... View the full answer