1.1 Find the stock price on the exercise date for a european call option with strike pice R86 and exercise date in 4 months to produce a profit of r7 if the option is bought for R5.67, financed by a loan at 15% compounded continuously.

1.2 compute the value of an american put expiring at time 3 with strike price K=74 rands on a stock with initial price S0=72 rands in a binomial model with u=0.1, d=-0.05 and r=0.03