(a) Find a stock that pays a dividend and estimate the continuously compounded dividend payment rate (for example, q=.02). Using the Black/Scholes option pricing model, estimate the price of anat the moneycall optionandput optionthat have the same exercise price and maturity date. Assume r=.01 and use the appropriate S₀, t, K. For volatility, use the current VIX. (Note: you should use the Black/Scholes model with dividends in pricing the options)

(b) Evaluate how well the Black/Scholes model worked by comparing the results to the midpoints of the bid-ask prices.

(c) Find (through trial and error), the implied volatility (i.e., the volatility that equates the current call price and put price with the estimates from the Black/Scholes formula).