5) Suppose that a European call option with a strike price of $75 costs $4 and is held until expiration. a) Under what circumstances will the call option be exercised? (8 points) ic the Price-f underung ,smore than 75 then ThePTon wit, b) Under what circumstances the holder of the call option make a profit? (3 points egit is the Pice e c.esrat,on unber1.vn Pnreth. 79 t 6) Suppose that a European put option to with a strike price of $70 costs $5 and is held until expiration a) Under what circumstances will the put option be exercised? (3 points) b) Under what circumstances the seller of the put option make a profit? (3 points 7) Consider a four-month European put option on a non-dividend-paying stock when the stock price is SS5, the strike price is S60, and the risk-free interest rate is 12% per annum? a)What is the lower bound for the price of this European put option (4 points ac S1.5. Is there an arbitrage opportunity? b)You check the market and see that the put option is trading at state the actions you need to take today to exploit this arbitrage opportunity (4 points) Since the PuTPs.9t 15 there