(The Black-Scholes-Merton Model) Consider an option on a non-dividend paying stock when the stock price is $80, the exercise price is $75, the annual risk-free interest rate is 5%, the annual volatility is 20%, and the time to maturity is 9 months.

1. What is the price of the option if it is a European put?
2. What is the price of the option if it is a European call? Verify the put-call parity.
3. If the stock starts paying a continuous dividend of 1% per year, what is the new price of the European call?