Consider an option on a dividend-paying stock when the, Ask an Expert

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Consider an option on a dividend-paying stock when the stock price is $41, the strike price is $40, the risk-free interest rate is 6% per annum, the volatility is 35% per annum, and the time to maturity is one year. The dividend to be paid in 6 months is $0.50. What is the price of the option if it is a European call? What is the price of the option if it is a European put? Use the Black Scholes formula to answer the questions above. Make sure that you show or explain all calculations. Make sure you answer all questions above.

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