A non-dividend paying stock has a current share price of $22. A two-year European call option with a strike price

A non-dividend paying stock has a current share price of $22. A two-year European call option with a strike price

Question:

A non-dividend paying stock has a current share price of $22. A two-year European call option with a strike price of $20 is written on the stock. The risk-free rate is 5% per annum compounded continuously. Which of the following call premiums is rationally priced in a no-arbitrage risk-neutral world?Hint: Consider the price boundaries of a call option.A.$3B.$1C.$4D.$2

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