For the next two questions please ensure that you plot graphs in excel and paste them and the solver output in a word document. I do not need to see your excel files.

4. Use the information below to find the implied volatilities for Exxon Mobil May call prices. Plot the implied volatilities versus the strike prices. What are your inferences from the shape of the implied volatility curve?

Exxon Mobil (XOM) 04/29/2010 call prices
Current Stock Price	Strike Price	Risk-Free rate	Time to Maturity	Observed call price	Implied Volatility
67.3	45	0.25%	0.145	22.4
67.3	55	0.25%	0.145	12.425
67.3	60	0.25%	0.145	7.475
67.3	65	0.25%	0.145	3.15
67.3	70	0.25%	0.145	0.715
67.3	75	0.25%	0.145	0.105

5. Use the information below to find the implied volatilities for Ford May call prices. Plot the implied volatilities versus the strike prices. What are your inferences from the shape of the implied volatility curve?

Ford (F) 04/29/2010 call prices
Current Stock Price	Strike Price	Risk-Free rate	Time to Maturity	Observed call price	Implied Volatility
13.57	10	0.25%	0.145	3.65
13.57	11	0.25%	0.145	2.75
13.57	12	0.25%	0.145	1.925
13.57	13	0.25%	0.145	1.24
13.57	14	0.25%	0.145	0.74
13.57	15	0.25%	0.145	0.41
13.57	16	0.25%	0.145	0.225
13.57	17	0.25%	0.145	0.12
13.57	18	0.25%	0.145	0.07