Smedley Company stock is currently selling for $40 per share. Its historical variance of returns is .25, compared to the historical market variance of .10. The current one-year treasury-bill rate is 5%. Assume that all of the standard Black-Scholes Option Pricing Model assumptions hold.

a. What is the current value of a put on this stock if it has an exercise price of $35 and expires in one year?

b. What is the implied probability that the value of the stock will be less than $30 in one year?