1.) Given the following put-call parity for European options:

C_t + K/(1+r) = S_t + P_t

Suppose stock Y is currently traded at $10 and its 1-year put option with a strike of $9 is currently traded at $1, what is the price of a 1-year call option with a strike of $9 written on stock Y given a 1-year risk-free interest rate of 0%?

Please ignore the $ sign when inputting your answer (e.g. write 1 instead of $1).

2.) Which of the following statement(s) is/are true? (I) A farmer can hedge against the potential decline in future corn prices by taking a long position in a forward contract written on corn. (II) A farmer can hedge against the potential decline in future corn prices by taking a short position in a forward contract written on corn. (III) A baker can hedge against the potential increase in future flour prices by taking a long position in a forward contract written on wheat. (III) A baker can hedge against the potential increase in future flour prices by taking a short position in a forward contract written on wheat.

a. II only.

b. III only.

c. II and III only.

d. I only.

e. I and IV only.

Please explain choice or no likes. Thanks!