Question: You have an underlying asset worth 40 dollars that will either go up in value, u=e0.10, or fall in value, d=e-0.10 ,in one period. You

You have an underlying asset worth 40 dollars that will either go up in value,u=e0.10,or fall in value,d=e-0.10,in one period.

You have a call option on this asset with a strike price of $43.

Cu, which is the intrinsic value of the call when the underlying asset price goes up, is $____ and

Cd, which is the intrinsic value of the call when the underlying asset price goes down, is $____.

(hint use Binomial model)

Group of answer choices

$1.21, -$6.81

$3.26, -$5.76

$4.26, $0

$1.21, $0

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