LMK share current trading price = $17.99

PKL shares current trading price = $13.90

risk free rate = 1.55% per year

1) If PKL shares have a 49% chance of increasing by 16% and a 51% chance of decreasing by 12% by the date of the option expiration, what will be the expected return on PKL shares and the expected return on a protective put position? Assume the put has a price of $1 and has a strike price of $6.74.

2) If you also short a call on PKL will create a risk free portfolio - What is the delta (number of shares)? Note, the call is European and strike price is $13.006.

3) Use info above, what is the risk neutral probability of PKL shares increasing 17% if the time-step to the next node is 1 year? Is your option strategy a: straddle, covered call, protective put, or butterfly spread?

4) What is the Black-Scholes price of the call on LMK with strike price of $14.50 if there is 6 months until the call expires and the annual st.dev of the stock price is 19.99%.

*PLEASE SHOW STEP BY STEP CALCULATION WORK!