Finance 101

Calculate the current value to the consumer of an agreement to pay the consumer thae maximum of 100 and the stock price at the end of 4 months.

Let S(t) be the price of the stock at time (t)

Given:

For the following Black-Scholes Framework

a. The current price is 90

b. r = 0.05

c. The stock pays a dividend of 2 at the end of 3 months

d. = 0.05