Question: Suppose S = 70, X = 65, r = 0.05, p = 0.6, Cu = 7.17, Cd = 1.22 and there is one period left

Suppose S = 70, X = 65, r = 0.05, p = 0.6, Cu = 7.17, Cd = 1.22 and there is one period left in an American call's life. What will the option be worth? Assume non-continuous compounding.

a. 6.83

b. 0.00

c. 4.56

d. 5.00

e. none of the above

ans: d (early exercise at c0)

the answer is given. can someone please help me with the steps before finals. thanks

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