Intro The current price of a stock is $103 and the annual standard deviation of the rate of return on the stock is 20%. The stock is expected to pay dividends of $1.18 in 2 months and $1.18 in 5 months. A European put option on the stock has a strike price of $90 and expires in 0.7 years. The risk-free rate is 4% (continuously compounded). Part 1 Attempt 1/5 for 10 pts. What is the present value of the dividends? Correct PV(D)=1.18e0.04122+1.18e0.04125=2.333 Part 2 Attempt 1/5 for 10 pts. What is the value of N(d1) in the Black-Scholes formula? Correct Stock price less present value of dividends: S0=1032.333=100.67 Value of d1 : d1=T21ln(KS0)+(r+22)T=0.20.721ln(90100.67)+(0.040+20.22)0.7=0.92 Using Excel's NORM.S.DIST(0.92, true) function: N(d1)=N(0.92)=0.1787 What is the value of N(d2) ? Part 4 What should be the price (premium) of the put option