4.a)An investment company is offering you a scheme where you invest $ 3000 today

and the company gives you an interest of 3.5% compounded semi annually, in

3 years time. What is the amount you will receive after 3 years time?

b)Use the Black-Scholes-Merton model to calculate the prices of European call

on an asset priced at $68.50. The exercise price is $65, the continuously

compounded risk-free rate is 4%, the options expire in 110 days, and the

volatility is 0.38. There are no cash flows on the underlying.

.Use the Black-Scholes-Merton model to calculate the prices of European call

on an asset priced at $68.50. The exercise price is $65, the continuously

compounded risk-free rate is 4%, the options expire in 110 days, and the

volatility is 0.38. There are no cash flows on the underlying.