Question 1. Given the price of a stock is $21, the maturity time is 6 months, the strike price is $20 and the price of European call is $4.50, assuming risk-free rate of interest is 3% per year continuously compounded, calculate the price of the European put option?

Hint: Use put-call parity relationship.

Note: Bull spreads are used when the investor believes that the price of stock will increase. A bull spread on calls consists of going long in a call with strike price K1 and going short on a call with strike price K2, with K2 > K1, and the expiration is the same for both options.