Question: (a) Determine the premium for a European put option using the Black-Scholes formula when the spot price is $60 and the strike price is $62.

(a) Determine the premium for a European put option using the Black-Scholes formula when the spot price is $60 and the strike price is $62. The interest rate is 4% and the maturity is 9 months. The volatility is 35% and the dividend payment is 2%. (b) How would you determine whether the option is correctly priced or not based on your calculation? Provide a complete answer.

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