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Compute the price of the call

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Reference no: EM131523934

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 87 days. The current price of Up stock is $124.63?, and the stock has a standard deviation of 45% per year. The? risk-free interest rate is 6.56% per year. Up stock pays no dividends. Use a? 365-day year.

a. Using the? Black-Scholes formula, compute the price of the call.

b. Use? put-call parity to compute the price of the put with the same strike and expiration date.

?(Note?: Make sure to round all intermediate calculations to at least five decimal places.?)

? a. Using the? Black-Scholes formula, compute the price of the call.

The price of the call is ?$___________.?(Round to two decimal? places.)

b. Use? put-call parity to compute the price of the put with the same strike and expiration date.

The price of the put is ?$___________.? (Round to two decimal? places.)

Reference no: EM131523934

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