1. Suppose that the market price of an underlying stock went from $40.00 to $45.00 and the option price went from $8.00 to $10.00. Find the delta ratio. Explain what it means.
2. If the strike price of a call option is $75.00 with a 6-month maturity and the market price of the underlying stock is $88.00 with a standard deviation of returns of 2.34, what is the value of the call if the risk-free rate is 6%?