Use an options calculator for the first 2 problems

1a. For a stock trading at $50 with 15% volatility and 2% risk free interest rate, find the prices of a one month put and call options with a strike price of $50.

b. Determine the effect on both the put and call of increasing the strike price to $55

c. Determine the effect of doubling the time to maturity

2. Use one month at the money call option prices to determine the implied volatility of AT&T (Symbol T) and Qualcomm (Symbol QCOM). Which is riskier?

3. Use a one step binomial option pricing model to value a 1 year at the money call option on AT&T. Assume interest rates are 2%.

How does your value compare with the market price?

4. What are some advantages and disadvantages of the gold standard?

6. Coca-Cola and British Airways face the following borrowing costs: Dollars Pounds Coca-Cola 5% 8% British Airways 10% 7% British Airways wants to expand in the US and Coca-Cola wants to expand in the UK. Design a swap where both companies benefit.