Question 5 Given the inputs r = 0.045, So = $45 and T = 1/4, consider the following European call option schedule Strike $X |Option Price Co 40 6.3718 42 4.6538 44 2.9886 46 1.7042 48 1.1859 50 0.9591 Part A Find the implied volatilities for each of these options and hence derive a volatility smile Part B What does the volatility smile tell you? How can we relate this to Black Scholes Merton. Thus, what are the limitations of BSM? How might this be corrected