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a. b. and c. Open Ended Questions (Show Calculations to Get Any Credit) Q2. The following information is given about options on the stock of

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Open Ended Questions (Show Calculations to Get Any Credit) Q2. The following information is given about options on the stock of a certain company. (50 points) So - 30 X-29 T=0.75 Is = 0.09 620.45 No dividends are expected. Answer the following questions.. What value does the Black-Scholes-Merton model predict for the call? (20 points) a. b. Suppose you feel that the call is overpriced. What strategy should you use to exploit the apparent misvaluation? (5 points) How do you construct a riskless hedge, and calculate the number of calls per 100 shares Ourchased? Explain (5 points) Open Ended Questions (Show Calculations to Get Any Credit) Q2. The following information is given about options on the stock of a certain company. (50 points) So - 30 X-29 T=0.75 Is = 0.09 620.45 No dividends are expected. Answer the following questions.. What value does the Black-Scholes-Merton model predict for the call? (20 points) a. b. Suppose you feel that the call is overpriced. What strategy should you use to exploit the apparent misvaluation? (5 points) How do you construct a riskless hedge, and calculate the number of calls per 100 shares Ourchased? Explain (5 points)

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