Calculate the Black&Scholes&Merton call and put premiums S = 29.50, K = 32.5, T - t = 53 days, the annual risk-free rate with continuous compounding r = 4.736% and VOL is a = 50%. In calculating N(d1) and N(d2), use the interpolation explained above the Normal tables and in my slides. Q2. Consider Europen call and a put on a non dividend paying stock; both for K = $45 and T = 1yr. The stock price is $45/share. The Call premium is equal to the put premium c = p = $7/share/share. The annual risk-free rate is 10%. Use the put-call parity and show that there exists an arbitrage opportunity. Q3. Show the complete table of cash flows and P/L at the options expiration date, T, of a strategy which is based on your result in Q2. and is an arbitrage profit strategy. Q4. Consider three strike prices: K < K