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1.By Using the Black-Schoeles-Merton Model find out the price of XYZ's call option which has a strike price of $80, and expires in 132 days. XYZ's stock is currently trading at $87 and is expected to pay a dividend of $2.30 next year. The standard deviation of XY2's stock price is estimated to be 28%, its beta is estimated to be 1.25 and the risk-free rate of return is currently 4%.

2. A stock with a current price of $25 will either move up by a factor of 1.4 or down by a factor of 0.8 over the next period. The risk-free rate of interest is 3.5%. What is the value of a call option with a strike price of $30?

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