6. An American call option on a stock has a strike price of 85 and expires in 5 months. You are given: (i) The annual continuously compounded interest rate is 4%. (ii) A dividend of 1.50 is payable at the end of today, and another dividend of 1.50 is payable in 3 months. (iii) The current price of the stock is 100. (iv) A European put option with a strike price of 85 which expires in 5 months costs 0.82. (a) (3 points) Find the otherwise identical European call option price. (b) (3 points) Could it be rational to exercise the American call option immediately, before the dividend is paid? Explain why based on your calculations. (Hint: check first the inequity when it is not rational to early exercise.) 6. An American call option on a stock has a strike price of 85 and expires in 5 months. You are given: (i) The annual continuously compounded interest rate is 4%. (ii) A dividend of 1.50 is payable at the end of today, and another dividend of 1.50 is payable in 3 months. (iii) The current price of the stock is 100. (iv) A European put option with a strike price of 85 which expires in 5 months costs 0.82. (a) (3 points) Find the otherwise identical European call option price. (b) (3 points) Could it be rational to exercise the American call option immediately, before the dividend is paid? Explain why based on your calculations. (Hint: check first the inequity when it is not rational to early exercise.)