Question 6 (12 Marks) a. Esther sold a bond future contract on Thursday. On Friday, the Clearing House notified her that it has credited funds to her margin account. What happened to interest rates over that day? Briefly explain your answer. 3 marks b. Assume the current price of the stock of Health Lab is $50 and the April expiration call option with a strike price of $42 are selling for $8.50. What is the intrinsic value of the option? What is the time value of the option? 3 marks C. Suppose that the current market price of the stock Buttercup is $200. Further, suppose that the interest rate is zero, and investors can buy a call option for the Buttercup stock with a strike price of $200. If the stock Buttercup can rise or fall by $30 with equal probability over the option period, and the option cannot be exercised until the expiration date, what is the time value of the call option? 3 marks d. Outline three factors that will cause the value of put options to decrease. 3 marks Show all your calculations