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Business, 04.12.2020 16:50 rgilliam3002

The current price of LC Corporation stock is $60. In each of the next two years, this stock price can either go up by 10% or go down by 5%. LC stock pays no dividends. The one-year risk-free interest rate is 6% and will remain constant. Compute the price of a derivative that pays $10 if the stock goes up twice, $5 if it goes down twice and $50 otherwise.

Group of answer choices
a) 22.51
b) 35.34
c) 25.30
d) 23.86

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