Question: Stock A currently costs $ 2 9 . 8 6 and will either rise by 2 0 % or fall by 5 % in each

Stock A currently costs $29.86 and will either rise by 20% or fall by 5% in each of the next two periods. The risk-free rate is 4% per period. There exists a call option on Stock A with a strike price of $28 and two periods until expiration. If Stock A goes up from Period 0 to Period 1, what will the call option be worth in Period 1?

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