The following information is given about options on the stock of a certain company:

S0= $20, X =$20, r =5% (c.c.), T = 0.5 year,Standard Deviation= 0.20

No dividends are expected. One option contract is for 100 shares of the stock. All notations are used in the same way as in the Black-Scholes-Merton Model.

Answer the following questions:

1. What is the European call option price and European put option price, according to the Black-Scholes model?

1. What is the costofbuyinga protective put?

1. What is the costofwritinga covered call?

1. What will be the payoff and profit of the protective put if the stock price on maturity is $16,$18, $20,$22,or $24?