1.Suppose that a European put option to sell a share for $60.00 costs $8.00 and is held until maturity.

(a)Under what circumstances will the holder of the option make a profit?

(b)Under what circumstances will the option be exercised?

(c)Draw a diagram illustrating how the profit from a long position in the option depends on the stock price at maturity of the option. Cleary indicate the horizontal, vertical axes as well as the strike price value and option price on the graph.