The market prices are S = $50, c = p = $3, K = $52, r = 8% (use N continuous-discounting), T = 1 year and D = 0. a) What is the lower-bound price of c? How large is the arbitrage profit? Is there an arbitrage opportunity? How do you arbitrage? Note you must show the opening transactions to set up the arbitrage but you don't have to show the closing transactions for demonstrating the profit is risk less. b) What is the corresponding lower-bound price of an American call option and why? Note D=0. c) What is the corresponding lower-bound price of a European put option? d) What is the corresponding lower-bound price of an American put option? e) Show if there is violation in put-call parity. Draw a figure to show the variation of an American put option with the underlying stock price