A non-dividend-paying stock is currently priced at $95 and the risk-free rate with continuous compounding is 5% per annum. Consider options on this stock that have a strike price of $102 and maturity of 2 years.

a) If the price of a European put option on the stock is currently $14 what will be the price of a European call option on the stock in the absence of arbitrage (round to the nearest cent).

European call price is: $ ______

b) If the price of a European put option on the stock is currently $14 while the price of a European call option on the stock is $19, what positions do you need to take today to take advantage of the arbitrage opportunity?

Positions for arbitrage profit (for each asset enter either "long" or "short"): _____ the call; _____ the put; _____ the stock

c) If the stock is expected to pay a dividend of $7 in one year and the price of a European put option on the stock is currently $14 what will be the price of a European call option on the stock in the absence of arbitrage (round to the nearest cent).

European call price is ______