Compute january 12 2004 bid and ask volatilities

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1. Compute January 12 2004 bid and ask volatilities (using the Black-Scholes implied volatility function) for IBM options expiring January 17. For which options are you unable to compute a plausible implied volatility? Why?

2. Compute January 12 2004 bid and ask volatilities (using the Black-Scholes implied volatility function) for IBM options expiring February 21.

a. Do you observe a volatility smile?

b. For which options are you unable to compute a plausible implied volatility? Why?

Reference no: EM131368572

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