Microsoft's stock price is now $40 per share. Microsoft will pay a $1 dividend in 4 months.

Consider the following European options on Microsoft stock.

1). Calculate the no-arbitrage price of 5-month put (K=35, T=5 months), implied by

put-call parity? Round your answer to two decimal places

2). Consider the put and call options that expire in 3 months. Is there any arbitrage opportunity in this situation? If yes, how would you take advantage of it? Please outline all the steps you would take at time zero so that you would have a positive profit at time zero and zero net cash flow in the future?

Microsoft's stock price is now $40 per share. Microsoft will pay a $1 dividend in 4 months. Consider the following European options on Microsoft stock. Note: Please type in numbers without the dollar signs. 1). Calculate the no-arbitrage price of 5-month put (K=35,T=5 months), implied by put-call parity. Round your answer to two decimal places [10 points] zero so that you would have a positive profit at time zero and zero net cash flow in the future. [36 points] Note: 1. Use uppercase S to represent the stock price at the expiration. Hint: S will be in the solution of some cells 2. Don't type in the dollar sign. 3. Round the answer to two decimal place, if needed Points possible: 24 (1) Buy Sell Points possible: 3 (2) Buy Sell Points possible: 3 (3) Buy Sell Points possible: 3 (4) Lend Borrow Microsoft's stock price is now $40 per share. Microsoft will pay a $1 dividend in 4 months. Consider the following European options on Microsoft stock. Note: Please type in numbers without the dollar signs. 1). Calculate the no-arbitrage price of 5-month put (K=35,T=5 months), implied by put-call parity. Round your answer to two decimal places [10 points] zero so that you would have a positive profit at time zero and zero net cash flow in the future. [36 points] Note: 1. Use uppercase S to represent the stock price at the expiration. Hint: S will be in the solution of some cells 2. Don't type in the dollar sign. 3. Round the answer to two decimal place, if needed Points possible: 24 (1) Buy Sell Points possible: 3 (2) Buy Sell Points possible: 3 (3) Buy Sell Points possible: 3 (4) Lend Borrow