II. (IS points) Basis of Stock Options Consider an exchange-traded call option contract to buy 100 shares with a strike price or 550 and maturity in one year months. Explain how the terms (i.e., strike price and number of shares) of the option contract change in the following scenarios: 1. S1 cash dividend 2. S-for-1 stock split 3. 25% stock dividend III. (10 points) Lower Bound of Call Options Suppose the following information is given on a European-style call option on a stock that pays no dividend: S0=40;T=1;K=35;r=5%(continuouscompounding) 1. Please calculate the minimum value of the call option. 2. If the call option is selling for $5.0. Is there an arbitrage opportunity? Please explain. (Answer yes or no, and give a brief explanation. No actual transactions are required.)