Q4. A stock is trading at $40. The exercise price of its call option is $36. . The expiration is six months. The std dev is 12% The annual interest rate is 10%. There is no dividend involved. In this case, according to B&S model, the price of the call option should be $

Q5. Your client needs $100,000 each year (in dollar today) 18 years from now for a retirement period of 20 years. The rate of inflation is 4% compounded annually. He will receive $36,000 in social security each year during retirement. Ignore the rate of inflation beyond year 18 and ignore inflation for social security. How much the client needs approximately each year, adjusted for social security, during retirement. Ignore tax in this part.

a. $166,581

b. $202,581

c. Less than $165,000

d. More than $203,000

e. None of the above