Consider a call option on IBM with strike price $100 and expiration in 5 months. Suppose IBM is trading at $112. The risk-free rate is 4.5% for all maturities. IBM will pay a dividend in 3 months of 40 cents per share.

(a) What is a lower bound for the value of the option?

(b) Suppose this call option is trading on the Philadelphia Stock Exchange for $18.50. What is the price of the corresponding put option if both options are European?