# Black Scholes equation application [closed]

I have gone through quite a few exercises using Black-Scholes equation (or formula as you wish to call it). However, I am not quite understand the following question:

A stock is currently selling at $S_0= \$92$and that the risk-free continuously compounded annual rate is$r=0.018$. Suppose that the exercise price is$K=\$98$ and the volatility of annual log-returns is $\sigma=0.2$.

If one quarter from now, the stock price is $\$95\$, what is the price of the call?

Any hints would be greatly appreciated.

-
 Did you even try to do your homework? – chrisaycock♦ Aug 20 '12 at 13:00

## closed as off topic by chrisaycock♦Aug 20 '12 at 13:00

Questions on Quantitative Finance Stack Exchange are expected to relate to quantitative finance within the scope defined in the FAQ. Consider editing the question or leaving comments for improvement if you believe the question can be reworded to fit within the scope. Read more about closed questions here.

## 1 Answer

First of all, I do not think anyone here is gonna solve your home work question. But here couple hints. One of the most important aspect you omitted is the expiration date of said option. Also you did not mention whether the stock pays any dividends: If it does do you know the dividend yield or are there any known dollar priced dividends gonna be paid during the life time of the option? Also is it a european or american option? Once you have that information I do not see a problem that keeps you away from pricing the option.

-