The price of a non-dividend-paying stock is $19 and the price of a 3 month European call option on the stock with a strike price of $20 is $1. The risk free rate is 4% per annum. What is the price of a three month European put option with a strike price of $20 ? Exercise 2 Suppose that a European call option to buy a share for $100.00 costs $5.00 and is held until maturity. Under what circumstances will the holder of the option make a profit? Under what circumstances will the option be exercised? Draw a diagram illustrating how the profit from a long position in the option depends on the stock price at maturity of the option Exercise 3 Derivatives: Isabel Figuerola-Ferretti What is a lower bound for the price of a six-month call option on a non-dividend-paying stock when the stock price is $80, the strike price is $75, and the risk-free interest rate is 10% per annum