Answer:
The correct answer will be "6.11008554". Further explanation is given below.
Explanation:
The given values are:
The current stock's price
= $50
Annual rate
= 10%
Exercise price
= $55
Expiry time
= 1 year
Now,
On applying the formula, we get
⇒ [tex]\frac{(MAX(65-55,0))-MAX(35-55,0)}{65-35}\times \frac{(MAX(65-55,0))-MAX(35-55,0)}{65-35}\times \frac{(MAX(65-55,0))-MAX(35-55,0)}{(\frac{1+10 \ percent}{365} )^{365}}[/tex]⇒ [tex]6.11008554[/tex]
