1. Develop an economic model in support of your projection for expected return on the SP500 for the ten-year period 2018-2028. You can use the Dividend Discount Model if you like, or some other economic model.

2. Suppose the price of a non-dividend paying stock is 40 and can go to 36 or 44 in 1 period Assume the risk-free rate is zero for this period.

Find the value of a call option with strike 40

Find the value of a put option with strike 38