1.The price of a European put that expires in one year and has a strike price of $210 is $15. The underlying stock price is $203 and the stock does not pay any dividend. The risk free rate is 5%.

a) What is the price of a European call option which expires in one year and has a strike price of $210?

b) Explain in detail the arbitrage opportunity that exists if the market price of the European call is $25.