1a. A stock trades for $42 per share. A call option on that stock has a strike price of $54 and an expiration date six months in the future. The volatility of the stock's returns is 41%, and the risk-free rate is 5%.

What is the Black and Scholes value of this option?

1b. A stock trades for $43 per share. A call option on that stock has a strike price of $54 and an expiration date three months in the future. When the volatility of the stock's returns is 30%, the Black and Scholes value of the option is $3.82. Now assume, the volatility of the stock's returns is 55%, and the risk-free rate is 3%.

The Black and Scholes value of this call option is