a.

The current stock price of Noole Inc is $48, and the stock does not pay dividends. The instantaneous risk-free rate of return is 7%. The instantaneous standard deviation of Noole Inc's stock is 25%. You want to purchase a put option on this stock with an exercise price of $43 and an expiration date 50 days from now.

Using Black-Scholes, the put option should be worth ______ today.

b.

You are cautiously bullish on the common stock of EXTREME INC over the next several months. The current price of the stock is $54 per share. You want to establish a bullish money spread to help limit the cost of your option position. You find the following option quotes:

EXTREME INC Underlying Stock price: $54.00
Expiration	Strike	Call	Put
June	49.00	8.90	2.20
June	54.00	4.70	3.40
June	59.00	2.20	7.90

Suppose you establish a bullish money spread with the puts. In June the stock's price turns out to be $56. Ignoring commissions, the net profit on your position is _______________.