Question: 5. (a) (5 points) Consider a stock with volatility o=0.3 and assume the risk-free interest rate is 8%. Suppose you buy a European call option

5. (a) (5 points) Consider a stock with volatility o=0.3 and

5. (a) (5 points) Consider a stock with volatility o=0.3 and assume the risk-free interest rate is 8%. Suppose you buy a European call option on this stock with strike price $15, maturing in 6 months and the current stock price is $10. What are the A and I' of this option? (b) (5 points) Consider a European call on a stock with A = 0.5 and I' = y. What are the values of A and I for a put on the same stock with the same exercise price and time to maturity

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