5. You are considering a put option on a stock. It is currently July 1 and the option expires July 31. The strike price is $220 and the current spot price is $222.43. The risk-free rate is 4.86%. The implied volatility of the stock is 45%. a. What should the premium be for this option according to the Black-Scholes model? (4 points) b. The option is currently selling for $15.67. Is the option overpriced or underpriced based on your calculation in a.? Explain. (3 points) 6. The following table provides daily returns for a given investment Day Return 0.1800% 0.1957% 0.2107% 0.2200% 0.2221% a. For the above returns, calculate the (3 points each) i. Average daily return ii. Standard deviation of the daily returns b. Annualize the average return and standard deviation of returns from a. (6 points) C. Based on the daily return average and standard deviation in a., (3 points each) i. What is the probability of observing daily returns lower than 0.22%? ii. What is the probability of observing daily returns higher than 0.19%