1. A stock peice is qugged as (109 in Londen and $150 in New York. The current exchange rate is 155300 . What is the atbitrage opportunity? So. f1001.53=$153 S. the arbitnge ofbertunity is $3 2. An investor buys a European put on a share for $2. The stock price is $42 and the strike price is $40. a) Under what circumstances the option is Gotyof money? ( 5 marks) b) Under what circumstances will the option be exercised? ( 5 marks) c) Draw a diagram showing the variation of the investor's profit with the stock price at the maturity of the option. ( 8 marks) a) Because the Steckprice is $42 and s Eupphanput on share for $2 So, wecanget the oting option isout of: $42+$2=$44 b) Became the strikeprice is $4, so, the optioin;is $40$2=$}8