You own one call option with an exercise price of $30 on Nadia Interiors stock. This stock is currently selling for $27.80 a share but is expected to increase to either $28 or $34 a share over the next year. The risk-free rate of return is 5 percent and the inflation rate is 3 percent. What is the current value of your option if it expires in one year?
A) $.76
B) $.79
C) $.89
D) $.92
E) $.95

Question

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The Answer of You own one call option with an exercise price of $30 on Nadia Interiors stock. This stock is currently selling for $27.80 a share but is expected to increase to either $28 or $34 a share over the next year. The risk-free rate of return is 5 percent and the inflation rate is 3 percent. What is the current value of your option if it expires in one year?
A) $.76
B) $.79
C) $.89
D) $.92
E) $.95

You Own One Call Option with an Exercise Price of $30