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24.7 Use the same inputs as in the previous problem. Suppose that you observe a bid option price of $50 and an ask price of $50.10. a. Explain why you cannot compute an implied volatility for the bid price. b. Compute an implied volatility for the ask price, but be sure to set the initial volatility at 200% or greater. Explain why the implied volatility for the ask price is extremely large. c. (Optional) Examine the code for the BSCallImpVol function. Explain why changing the starting volatility can affect whether or not you obtain an answer. d. What can you conclude about difficulties in computing and interpreting imvlied volatilities for deep in-the-monev ontions? 4.9 Compute January 122004 bid and ask volatilities (using the Black-Scholes implied volatility function) for IBM options expiring January 17. For which options are you unable to compute a plausible implied volatility? Why? 24.7 Use the same inputs as in the previous problem. Suppose that you observe a bid option price of $50 and an ask price of $50.10. a. Explain why you cannot compute an implied volatility for the bid price. b. Compute an implied volatility for the ask price, but be sure to set the initial volatility at 200% or greater. Explain why the implied volatility for the ask price is extremely large. c. (Optional) Examine the code for the BSCallImpVol function. Explain why changing the starting volatility can affect whether or not you obtain an answer. d. What can you conclude about difficulties in computing and interpreting imvlied volatilities for deep in-the-monev ontions? 4.9 Compute January 122004 bid and ask volatilities (using the Black-Scholes implied volatility function) for IBM options expiring January 17. For which options are you unable to compute a plausible implied volatility? Why