Thank you!

The price of an American call option on a dividend paying stock is $6.00. The stock price is $28.00, the strike price is $26.50 and the expiration date of the American call is 7 months. A dividend of $0.50 on the stock is expected to be paid in 5 months time. The risk free rate of interest is 20% p.a. continuous compounding for all maturities.

1. (i)Derive upper and lower bounds for the price of an American put option on the same stock with the same strike price and expiration date.
2. (ii)If the American put option was selling or trading in the market for $5.00, state how you would exploit any arbitrage opportunity (if any). You should assume the arbitrageur can borrow or lend at the risk free rate, can short sell shares if necessary and does not face any transaction costs.