The black scholes merton formulas for call and put options

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Reference no: EM131237499

1. Show that the Black-Scholes-Merton formulas for call and put options satisfy put-call parity.

2. A stock price is currently $50 and the risk-free interest rate is 5%. Use the DerivaGem software to translate the following table of European call options on the stock into a table of implied volatilities, assuming no dividends. Are the option prices consistent with the assumptions underlying Black-Scholes-Merton?

Reference no: EM131237499

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