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At the money call option

1) AKX stock is currently trading at $50 today and in one period will either be worth 20% more or 20% less. The risk-free rate is 4%. What is the value of an at the money call option?

A. $5.77
B. $6.00
C. $6.67
D. $10.00
E. $20.00

Solution Preview

The value in one period could be either 50X1.2 = 60 of 50X0.8 = ...

Solution Summary

The solution explains how to calculate the value of a at the money call option