Price of the Call Option Assignment

Minecraft stock is trading for $39. You are an option trader and want to buy a European call option with an exercise price of $50 and a maturity of 1 year. Assume that Minecraft stock pays no dividends and has a volatility of 40% per year. The risk-free rate is 3% per year. (2 decimal places for all parts)

a. What is the Black-Scholes price of the call option? Use the approximate formula N(d) = 0.5 + 0.4*d to compute N(d1) and N(d2).

b. Using the put-call parity formula, what is the price of a put option with the same exercise price and maturity? Get Finance homework help today

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