The price of Ervin Corp. stock will be either $90 or $116 at the end of...

The price of Ervin Corp. stock will be either $90 or $116 at the end of the year. Call options are available with one year to expiration. T-bills currently yield 5 percent.

a.	Suppose the current price of the stock is $99. What is the value of the call option if the exercise price is $85 per share? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
b.	Suppose the exercise price is $110 and the stock price is $99. What is the value of the call option now? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

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jeff jeffy answered 9 months ago

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