Suppose that the current price of a stock is $120 per share with volatility s = 50% per annum….

Suppose that the current price of a stock is $120 per share
with volatility _ = 50% per annum. Suppose further that the risk-free
interest rate is 7% per annum and the stock pays no dividend. (a) What is the
price of a European call option contingent on the stock with a strike price of
$125 that will expire in 3 months? (b) What is the price of a European put
option on the same stock with a strike price of $118 that will expire in 3
months? If the volatility _ is increased to 80% per annum, then what are
the prices of the two options?