Question: 1. (McDonald Problem 11.3 p. 342/3) Let S = $100, K = $120, 0 = 30%,r=8%, and 8 = 0%. a. Construct a table reporting

1. (McDonald Problem 11.3 p. 342/3) Let S = $100, K = $120, 0 = 30%,r=8%, and 8 = 0%. a. Construct a table reporting time to expiration and the Black-Scholes call price for T = 1, 2, 5, 10, 50, 100, 500. What happens to the option price as T ? b. Construct the same table, but this time set 8 = 0.001 (0.1%). Now what happens to the option price? What accounts for the difference? 1. (McDonald Problem 11.3 p. 342/3) Let S = $100, K = $120, 0 = 30%,r=8%, and 8 = 0%. a. Construct a table reporting time to expiration and the Black-Scholes call price for T = 1, 2, 5, 10, 50, 100, 500. What happens to the option price as T ? b. Construct the same table, but this time set 8 = 0.001 (0.1%). Now what happens to the option price? What accounts for the difference

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