Price of put option with the same strike price and maturity

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A stock is currently selling at $60. Over each of the next two six month periods, the stock may move up to a factor 1.15 or down by a factor of 0.85 each period. A call option with strike price of $59 and a maturity of one year is available. The current risk free rate is 4.6% per year. A. Is the call option in the money, at the money, or out of the money? Explain b. What is the intrinsic value of this call option? May the price of a call option be ever lower than the intrinsic value? Why? c. Find the price of the call option. d. Find the price of a put option with the same strike price and maturity.

Reference no: EM131179779

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