1. It is March 12. Apple Inc.'s (AAPL) stock is currently trading at US$121.03 per share and has a volatility of 40%. The stock has a dividend yield of 2.5%. The current risk-free rate of interest is 5% per annum. When solving the following problems, show each step. a. What is the price of a European CALL option written on this stock with a $150 strike price that expires in 35 days? Price the option using the Black-Scholes model. Calculate the delta, , of the CALL option and interpret. Calculate the elasticity of a call option, Q, and interpret. What is a lower bound for the CALL option? b.What is the price of a European PUT option written on this stock with a $150 strike price that expires in 35 days? Price the option with the Black-Scholes model. Calculate the delta, , of the PUT option and interpret. Calculate the elasticity of the PUT option, and interpret. Calculate the volatility of the option. What is a lower bound for the PUT option? S.Based on your answers to (a) and (b), verify the put-call parity holds. d. What is the price of a European CALL option written on this stock with a $150 strike price that expires in 35 days? Price the option with a two-step binomial tree model. Would your answer change if it were an American CALL option? Show your work. e. What is the price of a European PUT option written on this stock with a $150 strike price that expires in 4 weeks? Price the PUT option with a two-step binomial tree model. Would your answer change if it were an American PUT option? Show your work. f.Using Suu, Sud, full, fun, So and f from 4.d., calculate the delta, A, and the elasticity, Q, of the PUT option and the volatility of the option. Interpret your results. It is March 12. Apple Inc.'s (AAPL) stock is currently trading at US$121.03 per share and has a volatility of 40%. The stock has a dividend yield of 2.5%. The current risk-free rate of interest is 5% per annum. When solving the following problems, show each step. a. What is the price of a European CALL option written on this stock with a $150 strike price that expires in 35 days? Price the option using the Black-Scholes model. Calculate the delta, 8, of the CALL option and interpret . Calculate the clasticity of a call option, and interpret. What is a lower bound for the CALL option? b. What is the price of a European PUT option written on this stock with a $150 strike price that expires in 35 days? Price the option with the Black-Scholes model. Calculate the delta, 6, of the PUT option and interpret. Calculate the elasticity of the PUT option, (2, and interpret. Calculate the volatility of the option. What is a lower bound for the PUT option? c. Based on your answers to (a) and (b), verify the put-call parity holds d. What is the price of a European CALL option written on this stock with a $150 strike price that expires in 35 days? Price the option with a two-step binomial tree model. Would your answer change if it were an American CALL option? Show your work e. What is the price of a European PUT option written on this stock with a $150 strike price that expires in 4 weeks? Price the PUT option with a two-step binomial tree model. Would your answer change if it were an American PUT option? Show your work f. Using Se Swa, fun. So, So and f from 4.d., calculate the delta. A, and the elasticity, 1 of the PUT option and the volatility of the option. Interpret your results. 1. It is March 12. Apple Inc.'s (AAPL) stock is currently trading at US$121.03 per share and has a volatility of 40%. The stock has a dividend yield of 2.5%. The current risk-free rate of interest is 5% per annum. When solving the following problems, show each step. a. What is the price of a European CALL option written on this stock with a $150 strike price that expires in 35 days? Price the option using the Black-Scholes model. Calculate the delta, , of the CALL option and interpret. Calculate the elasticity of a call option, Q, and interpret. What is a lower bound for the CALL option? b.What is the price of a European PUT option written on this stock with a $150 strike price that expires in 35 days? Price the option with the Black-Scholes model. Calculate the delta, , of the PUT option and interpret. Calculate the elasticity of the PUT option, and interpret. Calculate the volatility of the option. What is a lower bound for the PUT option? S.Based on your answers to (a) and (b), verify the put-call parity holds. d. What is the price of a European CALL option written on this stock with a $150 strike price that expires in 35 days? Price the option with a two-step binomial tree model. Would your answer change if it were an American CALL option? Show your work. e. What is the price of a European PUT option written on this stock with a $150 strike price that expires in 4 weeks? Price the PUT option with a two-step binomial tree model. Would your answer change if it were an American PUT option? Show your work. f.Using Suu, Sud, full, fun, So and f from 4.d., calculate the delta, A, and the elasticity, Q, of the PUT option and the volatility of the option. Interpret your results. It is March 12. Apple Inc.'s (AAPL) stock is currently trading at US$121.03 per share and has a volatility of 40%. The stock has a dividend yield of 2.5%. The current risk-free rate of interest is 5% per annum. When solving the following problems, show each step. a. What is the price of a European CALL option written on this stock with a $150 strike price that expires in 35 days? Price the option using the Black-Scholes model. Calculate the delta, 8, of the CALL option and interpret . Calculate the clasticity of a call option, and interpret. What is a lower bound for the CALL option? b. What is the price of a European PUT option written on this stock with a $150 strike price that expires in 35 days? Price the option with the Black-Scholes model. Calculate the delta, 6, of the PUT option and interpret. Calculate the elasticity of the PUT option, (2, and interpret. Calculate the volatility of the option. What is a lower bound for the PUT option? c. Based on your answers to (a) and (b), verify the put-call parity holds d. What is the price of a European CALL option written on this stock with a $150 strike price that expires in 35 days? Price the option with a two-step binomial tree model. Would your answer change if it were an American CALL option? Show your work e. What is the price of a European PUT option written on this stock with a $150 strike price that expires in 4 weeks? Price the PUT option with a two-step binomial tree model. Would your answer change if it were an American PUT option? Show your work f. Using Se Swa, fun. So, So and f from 4.d., calculate the delta. A, and the elasticity, 1 of the PUT option and the volatility of the option. Interpret your results