A six-month European call option's underlying stock price is , while the strike price is and a dividend of is expected in two months. Assume that the risk-free interest rate is per annum with continuous compounding for all maturities.

1) What should be the lowest bound price for a six-month European call option on a dividend-paying stock for no arbitrage?

2) If the call option is currently selling for $2, what arbitrage strategy should be implemented?

		1) theoretical price = $2.85
		1) theoretical price = $3.02
		1) theoretical price = $3.67
		1) theoretical price = 1.98
		2) arbitrage strategy: Buy the call and short the stock.
		2) arbitrage strategy: Buy the call and buy the stock.
		2) arbitrage strategy: Short the call and buy the stock
		2) arbitrage strategy: Short the call and sell the stock