Q$4)$

Assume the Black$-$Scholes framework. Eight months ago, an investor borrowed money at the

risk$-$free interest rate to purchase a one$-$year $75-$strike European call option on a nondividend$-$

paying stock. At that time, the price of the call option was $8.$ Today, the stock price is $85.$ The

investor decides to close out all positions. You are given:

$($i$)$ The continuously compounded risk$-$free rate interest rate is $5\%.$

$($ii$)($ii$)$ The stock's volatility is $26\%.$

Calculate the eight$-$month holding profit. $[5]$