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1. Account accumulates value using simple interest at an annual rate of 10%. Account Y accumulates value using compound interest at an annual effective rate of 8%. Find the time at which the two accounts have the same force of interest.

2. A stock currently trades for $110 per share. Call options on the stock are available with a strike price of $115. The options expire in 20 days. The annual risk free rate is 4% and the expected standard deviation is 0.40. Find the value of a call option and put option using the Black-Scholes option pricing model (Assume 365 days per year).

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92657257

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