(A) Calculate the arbitrage free time zero price of a European call option with strike price K = 5. You may choose ANY of the methods we have discussed in the lecture notes or from Bailey's textbook. State the method followed and indicate where (NAP) is used. (B) Calculate the arbitrage free time zero price of a European put option with strike price K = 5. You may choose ANY of the methods we have discussed in the lecture notes or from Bailey's textbook. State the method followed and indicate where (NAP) is used. (C) Check your answer to either (A) or (B). Clearly indicate which answer you're checking! You must, however, check it by using a different method (of your choice) than the one used to find your answer. For instance, suppose you chose to replicate the option's payoffs by a portfolio of the risky asset and safe asset in, say case (B). Then you had to invoke (NAP) in some form (e.g. Law of One Price (LOP)). Then you should use either risk neutral pricing or state prices to answer question(C) and thereby check your answer by a method independent from the one used originally. You should get the same answer in (C) as you got in, say (B), if that's the one you're checking. (A) Calculate the arbitrage free time zero price of a European call option with strike price K = 5. You may choose ANY of the methods we have discussed in the lecture notes or from Bailey's textbook. State the method followed and indicate where (NAP) is used. (B) Calculate the arbitrage free time zero price of a European put option with strike price K = 5. You may choose ANY of the methods we have discussed in the lecture notes or from Bailey's textbook. State the method followed and indicate where (NAP) is used. (C) Check your answer to either (A) or (B). Clearly indicate which answer you're checking! You must, however, check it by using a different method (of your choice) than the one used to find your answer. For instance, suppose you chose to replicate the option's payoffs by a portfolio of the risky asset and safe asset in, say case (B). Then you had to invoke (NAP) in some form (e.g. Law of One Price (LOP)). Then you should use either risk neutral pricing or state prices to answer question(C) and thereby check your answer by a method independent from the one used originally. You should get the same answer in (C) as you got in, say (B), if that's the one you're checking