"(1)Using the Black Scholes Option Pricing Model, calculate the value of Call and Put Options for a stock with the following information. Use the Power Point presentation along with the Standard Normal Distribution Table given to you from presentation to you on this topic. Show all your work.

Inputs:

Risk free rate = rfr = 0.10 or 10%

Time to maturity (by days in year) = (T) = 50/365

Exercise Price (X) = $40

Standard deviation (σ) = 0.23

Stock Price (S) = $42

(3)Given the following information, calculate the theoretical intrinsic value of the Call option using the Black Scholes Model. IF the market price for the Call option = $11, should the investor buy?

S = 14 = Stock Price

X = 16 = Exercise or Strike Price

r = 0.05 = Risk Free Rate

T = 0.25 = Time to Maturity (as a fraction of one year)

N(d1) = 0.1469

N(d2) = 0.1230"

Inputs:

Risk free rate = rfr = 0.10 or 10%

Time to maturity (by days in year) = (T) = 50/365

Exercise Price (X) = $40

Standard deviation (σ) = 0.23

Stock Price (S) = $42

(3)Given the following information, calculate the theoretical intrinsic value of the Call option using the Black Scholes Model. IF the market price for the Call option = $11, should the investor buy?

S = 14 = Stock Price

X = 16 = Exercise or Strike Price

r = 0.05 = Risk Free Rate

T = 0.25 = Time to Maturity (as a fraction of one year)

N(d1) = 0.1469

N(d2) = 0.1230"

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