URGENT, PLEASE ANSWER

QUESTION 4 A.4 Consider a market with two financial instruments: a risky stock and a risk-free bond. The bond pays interest r = 0 (as is common in these days). The stock price today (t = 0) is 100. At a future date (t = 1), the stock price is either 120, 100, or 80. All three events are equally likely. Consider a call option with strike price K = 90. What is the value of this option at time t = 0 to an expected-utility maximizing investor with utility function u(c) = Vc/2 ? Use the certainty-equivalent method from Lecture 4. The value has to be given with two digit precision (e.g., 1.23). QUESTION 5 A.5 Consider the market and financial assets in question A.4. Can you price the option using the no-arbitrage technique covered in Lecture 16? If you believe the option can be priced, calculate the price and type it with two digit precision (e.g., 1.23) in the text box below. If you believe the option can not be priced, explain why in 1-2 sen- tences. QUESTION 4 A.4 Consider a market with two financial instruments: a risky stock and a risk-free bond. The bond pays interest r = 0 (as is common in these days). The stock price today (t = 0) is 100. At a future date (t = 1), the stock price is either 120, 100, or 80. All three events are equally likely. Consider a call option with strike price K = 90. What is the value of this option at time t = 0 to an expected-utility maximizing investor with utility function u(c) = Vc/2 ? Use the certainty-equivalent method from Lecture 4. The value has to be given with two digit precision (e.g., 1.23). QUESTION 5 A.5 Consider the market and financial assets in question A.4. Can you price the option using the no-arbitrage technique covered in Lecture 16? If you believe the option can be priced, calculate the price and type it with two digit precision (e.g., 1.23) in the text box below. If you believe the option can not be priced, explain why in 1-2 sen- tences