6. (Call inequality) Consider a European call option on a non-dividend-paying stock. The strike price is K, the time to expiration is 7. and the price of one unit of a zero-coupon bond maturing at T is B(T) Denote the price of the call by C(5, T) Show that C(S, T) max [0,5 - KB(T)] [Hint Consider two portfolios:

(a) purchase one call. (6) purchase one share of stock and sell K bonds]