The current price of Natasha Corporation stock is $ 5.97 $5.97. In each of the next two years, this stock price can either go up by $ 2.50 $2.50 or go down by $ 2.00 $2.00. The stock pays no dividends. The one-year risk-free interest rate is 3.7 % 3.7% and will remain constant. Using the Binomial Model, calculate the price of a two-year call option on Natasha stock with a strike price of $ 7.00 $7.00. The price of the two-year call option is $ nothing . (Round to the nearest cent.)
Detailed answer is provided in the hand written notes below.
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