On May 16th, 2018, the closing price of Target stock was $75.83. A put option with strike price X=70.00 and maturity date June 15th, 2018 costs $0.78. Assume a continuously-compounded risk-free rate of 0.0176 (1.76%) per annum. Further, assume that the options are European and that the stock does not pay dividends.

a. If put-call parity holds, what should the price of the call option be?

b. Briefly explain why put-call parity tends to hold?