The present price of stock is 16. in 6 months price will be, Ask an Expert

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1)The present price of stock is $16. In 6 months, price will be either $20 or $13. Annual risk-free rate is 6%. Determine the price of the call option on stock which has the strike price of= $15 and which expires in six months. (Hint: Use daily compounding.)

2) Mary and Tom park their cars in the empty parking lot with n≥2 consecutive parking spaces (i.e, n spaces in the row, where only one car fits in each space). Mary and Tom choose parking spaces randomly. (All pairs of parking spaces are evenly likely.) What is the possibility that there is at most one empty parking space between them?

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