Question 4 a) Stock Z trades for $60 and has one-year call and put options written on it with exercise prices of $60. The annual standard deviation estimate is 10 percent and the annual riskfree rate is 5 percent. Compute the value of call and the value of put. (10 marks) b) Suppose Stock Y is priced at $125 a share, has a call with an exercise price of $150, has one month to expiration, and costs $0.125 per contract. Why do you suppose investors would be willing to purchase a call that is so far out of the money? Discuss your answer briefly. (15 marks)