1. Calculate the price of a three-month European call option on the spot value of silver. The three-month futures price is $12, the strike price is $13, the risk-free rate is 4% and the volatility of the price of silver is 25%.
2. A corporation knows that in three months it will have $5 million to invest for 90 days at LIBOR minus 50 basis points and wishes to ensure that the rate obtained will be at least 6.5%. What position in exchange-traded options should it take to hedge?