a Thomas is considering the purchase of a put option in anticipation of a price decline in the common stock of HSBC. The one-month option to sell 100 shares of HSBC at an exercise price of $60 per share can be purchased for $200. The stock of HSBC is currently selling for $58.75 per share. Assume there are no transaction costs and HSBC stock pays no dividends. i Determine Thomas's profit or loss on the option transaction if the stock price is $65 per share after a month. (3 marks) ii Determine Thomas's profit or loss on the option transaction if the stock price is $55 per share after a month. (5 marks) iii Determine the level of the stock price for Thomas to break even on the option transaction. (3 marks) iv Draw a well-labelled diagram showing the variation of his profit with the stock price at maturity of the option. (6 marks) b You notice that HKEX (388) shares are trading for $280 per share and its American call options with an exercise price of $265 are selling for $10. What is wrong here? Describe how you can take advantage of this mispricing if the option expires today