Question: If S= $120, K = $100, = 30%, r = 0, and = 0.08, compute the following: a. The Black-Scholes call price for 1 year,

If S= $120, K = $100, = 30%, r = 0, and = 0.08, compute the following:

a. The Black-Scholes call price for 1 year, 2 years, 5 years, 10 years, 50 years, 100 years, and 500 years to maturity. Explain your answer as time to expiration, T, approaches infinity.

b. Change r from 0 to 0.001. Then repeat a. What happens as time to expiration, T, approaches infinity? Explain your answer and include what, if any, accounts for the change.

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