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What is the value of the following call option according to the Black Scholes Option Pricing Model? What is the value of the put options?

  1. What is the value of the following call option according to the Black Scholes Option Pricing Model? What is the value of the put options?

Stock Price = $62.50

Strike Price = $60.00

Time to Expiration = 9 Months = 0.75 years.

Risk-Free Rate = 2.0%.

Stock Return Standard Deviation = 0.45.

  1. Draw the payoff picture at expiration for a long position in a call option that has a premium of $1.75 and a strike price of $40.

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