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Rebecca is interested in purchasing a European call on a hot new? stock, Up, Inc. The call has a strike price of $98.00 and expires in 88 days. The current price of Up stock is $119.05?, and the stock has a standard deviation of 38% per year. The? risk-free interest rate is 6.54% per year. Up stock pays no dividends. Use a? 365-day year.

a. Using the? Black-Scholes formula, compute the price of the call (round all intermediate calculations to at least five decimal? places).

The price of the call is: $ __?__ (Round to final answer to Part A to two decimals)

b. Use? put-call parity to compute the price of the put with the same strike and expiration date (round all intermediate calculations to at least five decimal? places).

The price of the put with the same strike and expiration date is: $ __?__ ?(Round final answer to Part B to two decimals)

Please provide the complete answers to part a. & b. and not just the d1 and d2 of each, rounding all intermediate calculations to at least five decimal places.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92074505

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