Question II: The price of a non-dividend-paying stock is $100 and the continuously compounded risk-free rate is 5%. A 1-year European call option with a strike price of $100 x 0.05x1 = $105.127 has a premium of $11.924. A 1- year European call option with a strike price of $100 x e0.05x1.5 = $107.788 has a premium of $11.50. Demonstrate an arbitrage. For the two following questions, consider a one-period binomial model with continuously compounded interest rate with the following assumptions: Let S = $100, K = $95, r = 8%, T = 0.5, and 8 = 0. Let u= 1.3 and d=0.8. Question II: The price of a non-dividend-paying stock is $100 and the continuously compounded risk-free rate is 5%. A 1-year European call option with a strike price of $100 x 0.05x1 = $105.127 has a premium of $11.924. A 1- year European call option with a strike price of $100 x e0.05x1.5 = $107.788 has a premium of $11.50. Demonstrate an arbitrage. For the two following questions, consider a one-period binomial model with continuously compounded interest rate with the following assumptions: Let S = $100, K = $95, r = 8%, T = 0.5, and 8 = 0. Let u= 1.3 and d=0.8