Question 3

a. Explain the assumptions in the Black-Scholes-Merton model?

b. What is the price of a European call option on a nondividendpaying stock with the stock price is 73, with a strike price is 73, volatility is 40% pa. riskfree interest rate is 10% pa, and the time to maturity is 6 months?

c. Without applying the BlackScholes model, what is the price of a 6 month European put on the same stock in b) with strike price of 70

If possible, please provide a detailed step by step as I would like to fully understand and not just copy answers. Thank you :)