1. Merv Corp stock is currently trading at $165. The stock price a year from now will be either $285 or $120 with equal probabilities. The interest rate at which investors invest in riskless assets is 6%. Using the binomial OPM, the value of a put option with an exercise price of $190 and an expiration date 1 year from now should be worth __________ today. (Round intermediate calculation to 2 decimal places)

A $24.58

B $67.00

C 43.62

D $10.06

2. The current level of the S&P 500 is 1,450. The dividend yield on the S&P 500 is 5%. The risk-free interest rate is 8%. The futures price quote for a contract on the S&P 500 due to expire 3 months from now should be __________.

Multiple Choice

A 1,478.89

B 1,483.43

C 1,466.47

D 1,460.75