Options

Use two-state option pricing model to find the value of a call option and the intrinsic value given the following parameters:

T-bills yield: 3.8 pct.
Current stock price: $25.00
No possibility stock will be worth less this amount in one year: $22.00
Exercise Price: $12.00

a) Value of call = $10.44, Intrinsic Value = $13.00