4. (Call strikes) Consider a family of call options on a non-dividend-paying stock, each option being identical
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4. (Call strikes) Consider a family of call options on a non-dividend-paying stock, each option being identical except for its strike price The value of the call with strike price K is denoted by C(K) Prove the following three general relations using arbitrage arguments:
(a) KK, implies C(K) C(K)
(b) KK implies K K C(K) C(K).
(c) Ky Ky K implies C(K) - K3-Ky K K =) C (K) + ( K K K K C(K3)
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