Part I. Blasto options. Questions 1-5.

1.Blasto stock is currently $75/share.Blasto pays no dividend. The interest rate is 2.00%per calendar quarter.

Blasto stock either goes up by 20%, or down by 20%,each calendar quarter.

Calculateeitherw1or .

(That is, the weight associated with an upward price move, for the quarter.)

Express your answer to four digits; for example, .1234

2.Blasto stock is currently $75/share.Blasto pays no dividend. The interest rate is 2.00%per calendar quarter.

Blasto stock price either goes up by 20%, or down by 20%,each calendar quarter.

Consider a3-month European-style calloption on Blasto with strike price$75.

What is the option value today?

3.Blasto stock is currently $75/share.Blasto pays no dividend. The interest rate is 2.00%per calendar quarter.

Blasto stock price either goes up by 20%, or down by 20%,each calendar quarter.

Consider a6-month European-style calloption on Blasto with strike price$75.

What is the option value today?

4.Blasto stock is currently $75/share.Blasto pays no dividend. The interest rate is 2.00%per calendar quarter.

Blasto stock price either goes up by 20%, or down by 20%,each calendar quarter.

Consider a6-month American-style putoption on Blasto with strike price$85.

What is the option value today?

5.Blasto stock is currently $75/share.Blasto pays no dividend. The interest rate is 2.00%per calendar quarter.

Blasto stock price either goes up by 20%, or down by 20%,each calendar quarter.

Consider a12-month European-style calloption on Blasto with strike price$75.

How many different possible stock prices can Blasto have on the exercise date?