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87. A stock with a stock and exercise price of $20 can either increase to $26...

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Finance

87. A stock with a stock and exercise price of $20 can eitherincrease to $26 or decrease to $18 over the course of one year. Ina one-period binomial option model, given an interest rate of 5%and equal probabilities, what is the likely option price? (Useannual compounding.)

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87. A stock with a stock and exercise price of $20 can eitherincrease to $26 or decrease to $18 over the course of one year. Ina one-period binomial option model, given an interest rate of 5%and equal probabilities, what is the likely option price? (Useannual compounding.)

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