Problem 3. (Put-Call parity). Recall that call option (respectively put option) with maturity T and strike K has the payoff (St K)+ (respectively (K ST)+), with its price at time 0 Co (respectively Po). Consider a portfolio that has +1 call option and -1 put option. What is its no arbitrage price. In other words find Co Po. Can you explain intuitively why this is? (Hint: Recall Problem 2, and the fact that $K at time t=1 is worth $Ke " at time t = 0.)