a) The price company As stock is $50 and the price of its 3-month European call option on the stock with a strike price of $52 is $2. Draw the payoff graph for the option buyer.

b)The risk-free rate is 4% (compounded quarterly). The 3-month European put option with a strike price of $52 is sold for $3. The stock pays a quarterly dividend of $0.5. Given the call option information in a), describe the arbitrage strategy and calculate the profit.

c)Company Bs stock price is currently $20. It is known that at the end of 3 months it will be either $23 or $18. The risk-free interest rate is 5% per annum with continuous compounding. What is the value of a 6-month European call option with a strike price of $21? Show your work