Consider the situation where the Olympus stock price 3 months from the expiration of an option is $29, the exercise price of the option is $27, the risk-free rate is 4% per annum, and the volatility is 16% per annum.

a. Calculate the price of the European Call and European Put respectively.

b. If the quoted price of the European Call is $2.50, can you argue that the call is undervalued?

c. If the quoted price of the put is $1.75, can you argue that the put is overvalued?

d. Show by the means of well-drawn diagrams that Option-Pricing is a ZERO-SUM game. Explain your answers analytically.